How I got into penny stock in the first place?

After graduating from college in 2006, I got my first job in the IT field as a software engineer. Even though my salary was much higher than the average starting salary at the time, it still looked like a long journey till I could see $100,000 in my bank account. After paying taxes and bills, there was no way I could save up a six figure within the next five years. I thought about selling goods on eBay and Etsy as I did back in my college years to pay the tuitions, but it required a significant amount of manual work and efforts and I wanted something more automatic and passive with a higher % of ROI.

While I was actively looking for the right opportunity, I happened to meet and work with someone who was quite knowledgeable with decades of experience with penny stocks in 2007. He shared his stories in details in regards to investing in penny stocks, both the successful side and the unpleasant side. However, at the end of the day, he managed to be profitable with penny stocks and was already up close to a million dollars in total. While most of the penny stocks usually turn out to be garbage (according to him and based on my experience) and have huge risks, it could return 100%, 500%, 1000%, 2000%, and even higher % purely on rumors and speculations. Being in my 20s, I was a huge risk taker and eagerly wanted to try flipping stocks in short-terms to achieve my goal of having $100,000 in cash.

First penny stock investment was a huge success.. but then what?

After about 6 months of studying stocks on my own (reading books and tutorial articles, watching videos, etc) and receiving the fundamental yet essential training from the co-worker, I opened up my first brokerage account with Ameritrade (later I opened up another one with eTrade as it offered me less restrictions and more flexibility). I picked out a few companies and invested a couple thousand dollars into them based on my research (company news, balance sheets, filings, etc) and posts on the most popular stock board. Luckily the first few investments turned out to be very successful as each of them earned me 50 to 80% profits in less than 3 weeks. I became more confident and now wanted to invest larger amounts of money into my next tickers.

While searching for the next companies to invest, I came across this company that claimed to have a successful quarter from mining gold in a foreign country and currently awaiting an expansion project. I went through the basic information about the company and read hundreds of factual and speculative posts about it on the stock forums. Some of the most reputable authors with many followers on the board started posting positive views about the company, and the stock soon became one of the hottest topics on the site. The trading volume was gradually going up daily as people seemed to start loading up crazy at the share price of 0.0003 (initially started from 0.0001). I decided to invest some at 0.0004 even though I did not believe the company was 100% legitimate but only because it was likely going to run on further rumors. The very next day, the train was really taking off and reached 0.008 in a couple of hours. I got really excited and thought I got the last ticket of it at the right time. The RSI still had lots of room for it to run, and I did not sell even after it reached a 100% run from the price I bought it at. The company had put out some sort of news about its future business plans and projects in development that week, which nicely pushed up the price to 0.0014. At that point, I sold about 70% of my holding as I knew sooner or later it would get dumped unless the company proved what it had announced earlier in numbers through the next financial filing(s). Selling the rest of the shares on its way down, I was able to get rid of my position completely. The stock plummeted back to 0.0001 in the next 2 weeks as the company did not file on time, and most people sold to minimize their losses. I got out with $20,000 pure profits in just about 2 weeks into the stock, I could not be happier about how I got on and got out at the right times.

Leaving the penny stock world for a year..

After the mining company, all of my picks failed miserably for the next 2 years or so. I lost all I had made up to that point and was additionally down $40,000. The main problem that happened every time was triggered by my greed. When a stock is running and you are seeing your account balance growing exponentially, many people make a mistake thinking that the run will continue forever or at least a little more/longer. And that was exactly what happened to me most of the time and I ended up selling at a great loss or becoming a bag holder eventually. Consequently as a result, I was completely losing my interest in penny stocks as the last two companies I invested turned out to suck up money from their shareholders by releasing fake news to sell on incoming buyers -- Sadly I was one of the victims. I did all this to reach my first $100,000, but now it only seemed to have moved further away from me. Even though I accessed the stock board from time to time, I basically left the penny stock market for about a year not investing in a single company.

Please stay tuned for How I Made My First $100,000 with Penny Stocks #2.