The Complete Penny Stock Course: Learn How To Generate Profits Consistently By Trading Penny Stocks by Ben Alluch Jamil

Author:Ben Alluch, Jamil [Ben Alluch, Jamil]
Language: eng
Format: epub
Publisher: Millionaire Publishing
Published: 2018-05-24T16:00:00+00:00

Price Action, Volume and Patterns

P&D follow a very specific pattern that often repeats over time. It’s easily recognized when taking a look at the chart.

A promotion usually focuses on a stock that normally has very little to no trading volume over the past few months. Keep in mind that promotions aren’t usually run twice for the same stock in the short term.

Figure II.8.4 - Multicharts - ECRY daily chart - Pump and Dump

In the weeks before the promotion starts, there’s usually an increase in volume but price action remains flat. This is known as the pre-pump stage and is what pump speculators (#8 in our promoter pyramid) look for. It’s also where all the upper pyramid blocks have their hands.

The second phase of the promotion is when the promotion finally starts and the emails start to go out. Successful promotions are marked by a massive increase in volume and a spike in price over the next few days or weeks (depending on how long the promotion lasts).

Promoters are usually hired for an unspecified period of time that varies from promotion to promotion.

The final stage of the promotion is the dump, when everyone (except for long-term bag-holders) realizes that the company is really worthless, and the price drops back to its original price point within a matter of days.

This, in essence, is how a P&D works…

“From many shares in the hands of few, to few shares in the hands of many”– The Dean (Sykes & et al., The New Rules of Pennystocking, 2011)

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