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1 PennyStockProphet.com: Everything You Need To Know Before Investing In Micro Cap Stocks By James Connelly A.K.A. The Penny Stock Prophet

2 Getting Started Investing In Micro-Cap Stocks: To get started investing in micro cap stocks, the first thing you will need to do is sign up for an online brokerage account. There are many different options for today s investor to choose from, but there are a few questions you need to ask before deciding which broker to use. 1. Does your online broker have restrictions when it comes to trading micro-cap stocks? 2. Are there any additional fees associated with the account? 3. How much will each trade cost you? (transaction fee) 4. Is there a minimum required amount to start? Scottrade, Ameritrade and E-trade are probably the most well known online brokerage companies available to investors, and if you re signed up with one of them, then congratulations, you are one step ahead of the game! In my opinion all 3 of them are very good, even though they have higher transaction fees associated with them then some of the smaller online brokers. If you already have an account with one of these three brokers and are happy with it, then by all means keep it! If you re new to investing and you re looking for a good online broker, I highly recommend Zecco. I have a Zecco account currently, and have been completely satisfied with their service. Zecco also has the lowest fees of any online broker at $4.50 per trade.

3 One of the things I really like about Zecco is that they have no minimum initial amount required to get started. This is a huge plus for some of you newbie s who are just getting started and don t want to invest a large amount of money from the start. I recommend starting with at least $500 if you can afford it. Remember, you can always start with more or less, because there is no minimum when using Zecco. With Zecco if you start with $2500 or more, your trades are free, but for an amount smaller than $2500 each trade will cost you $4.50 per transaction. Believe me you will not find a cheaper transaction fee anywhere! Other benefits of Zecco for Micro Cap Trading are: 1. There are absolutely no restrictions when it comes to trading micro cap stocks. This is significant as some online brokers do not allow investors to purchase micro cap stocks. 2. Lowest fees of any online broker. ($4.50 per transaction or free starting with a balance of $2500 or more!) 3. User friendly trading platform. (simple even for beginners) 4. Fast execution of order. 5. Easy and fast funding. Wire transfers are available, and you can be ready to start trading in less than 3 days! To Sign Up for a Zecco Brokerage Account Visit:

4 Why a Recession Is the Best Thing That Can Happen To Penny Stock Investors A lot of people have asked me if it s still safe to invest in micro cap stocks during a recession. Before I answer that question let me emphasize that there is always a risk involved in investing in any market, regardless of what is happening in the economy. That being said, It has been my experience that a recession is the absolute BEST time to invest in micro cap stocks! Some of my biggest gainers in the last few years have come during a time when the big indexes were following a downward trend! I know that sounds crazy, but it s the truth! A recession in the big stock indexes is a positive factor in micro cap stocks due to the simple fact that when the big indexes aren t doing well, many investors take a break from large cap stocks to focus on micro cap stocks. Large cap stocks have a difficult time correcting from a negative trend in the overall market condition, while micro cap stocks are much more independent of overall market conditions. This brings the big guns with fat wallets into the microcap market, which means more liquidity in the micro cap sector. More liquidity = bigger gains for micro cap traders. So stop being negative about a struggling economy! A struggling economy is going to mean big gains for micro cap traders. I personally believe that the current economic conditions are going to show us bigger gains in the micro cap markets than we ve ever seen before! There couldn t be a better time to invest in micro cap stocks than right now!

5 Why Micro Cap Stocks Are So Profitable Micro cap stocks are a completely different breed than large cap stocks, and require a completely different strategy for investing. There is more risk associated with investing in micro cap stocks (we will discuss how you can limit that risk significantly in a few minutes) but there is also MUCH greater potential for huge gains in the micro cap markets than in any of the big markets. Large cap stocks are lucky to have gains of 5-8% in a single day, and even averaging 10% growth a year is considered a solid investment. Micro cap stocks however, can easily gain 25%+ in a single day, and some jump HUNDREDS of percent on merely a positive announcement! (I.E. Strong Financials, Approval of Funds, New Developments etc) It s a lot easier for a stock to jump from 3 cents to 9 cents (a 300% gain) than it is for a stock to go from 30 dollars to 90 dollars. (An equal percentage) Remember that a $10,000 investment in a 3 cent stock that jumps to 9 cents will earn you the same profit as a 30 dollar stock that jumps to 90 dollars. These big percentage gains are MUCH more common in micro cap stocks than they are in the big index stocks, and most importantly they can happen in days and weeks, rather than years! This is why there is SO much opportunity in the micro cap sector. These kinds of gains are a daily occurrence if you know to pick winners! (We ll explain how to find these winners later.) So what makes a micro cap stock rise in value so rapidly? There are a couple of factors. The first is due to a positive news announcement regarding a company. This can come in the form of

6 positive financial news, a new development, a breakthrough product, a contract landed etc. Let s look at an example of this. Let s say a small energy drink lands a contract with Starbucks to start selling their product at 1000 Starbucks locations across the country. Obviously investors will be lining up around the block to start buying shares in this company. Granted, this would be a pretty major announcement, but even something as simple as positive financials can cause these stocks to soar. However (and this is the key) many times positive news announcements do not affect a company s share price either positively or negatively. Why? The primary reason is LOW INVESTOR AWARENESS. Micro cap companies that do not contract investor relations firms have a hard time selling shares of their stock, simply because VERY FEW INVESTORS EVEN KNOW ABOUT THE COMPANY! This is why a company can have a very positive announcement, and have the share prices go unaffected.

7 The Match That Lights the Fire While there are numerous factors involved with choosing the right micro cap stock to invest in, the ones that make the biggest gains in the market (200% +) absolutely must have 1 essential factor working on its behalf. That factor is: VOLUME. Volume is the number of shares of any given stock that are traded during any trading day. This includes buying and selling. Volume is how you determine the amount of investor interest in a particular stock. It also helps you identify the amount of general awareness of the stock, which is crucial if you want to see the share price increase significantly. Here s how it works: High volume + Rising Share Price = Buying Pressure. This buying pressure is the increased awareness of the stock that continually brings more investment dollars into the stock, thus increasing demand and causing your investment to skyrocket! The question then becomes; how can I find out about these stocks before the big gains take place? How do I become the type of investor that can discover these stocks before they increase dramatically?

8 The Penny Stock Prophet System My system analyzes multiple factors for determining when a stock is about to break out of its normal cycle. Earlier I shared with you probably the most important factor (volume) that can cause a micro cap stock to skyrocket in value, however if this is the only factor you pay attention to, YOU ARE MISSING OUT ON MAJOR PROFITS! My system is able to identify winning stocks long before the investor interest (volume) arrives which means the system can identify the correct time to buy, assuring that you get in at the LOWEST POSSIBLE PRICE and see the LARGEST PERCENTAGE OF INCREASE! You will know about these stocks before the wave of investors discovers their true value! Imagine if you were one of the first investors to discover Walmart, Google or Yahoo! My system uncovers the most undervalued companies and discovers the buy point so that you know exactly when to buy putting you ahead of the wave of investors that are about to come pouring in! Let me make one thing clear. My system is for my members only. It took me nearly 2 years to develop and I m sorry, but I just can t give away my secrets for free. However, for downloading this free report I promised you that I would release 2 of my exclusive picks to you over the next month to show you how my system can work for you. BUT THERE IS A CATCH! As a non-paid member, you will not receive my next pick until 3 DAYS AFTER my paid members receive it. This is the only way to keep it fair, as my members paid a 1 time fee of $97 for a lifetime membership, in

9 order to get the inside track so that they can get in early before the stock rises in value. Unfortunately if you are not a paid member, this means you will miss out on some early gains, but at the same time it will be an excellent learning experience for you as you will be able to track the progress of the stock and see how the Penny Stock Prophet System can work for you. Thanks for taking the time to read this guide, and keep an eye out for your 2 FREE stock picks that will be sent directly to your . As I said before, you will be receiving each pick 3 days after my paid members, so you may miss out on some early profits by waiting. However If you are serious about making money and are ready to change your financial future forever, you can sign up for a lifetime membership to my daily alert newsletter by going back to: This will get you on the fast track to my exclusive picks, and assure that you lock in your position to receive substantial profits. Space is limited, so don t miss out on your chance to make SERIOUS money by trading alongside me. To Your Success! James Connelly A.K.A. - The Penny Stock Prophet If you want to become a member of my team and get in on the stock picks before they rise in value by 100%, 200% even 500%+ you can sign up for an instant membership at:

Stock investing became all the rage during the late 1990s. Even tennis

In This Chapter Knowing the essentials Doing your own research Recognizing winners Exploring investment strategies Chapter 1 Exploring the Basics Stock investing became all the rage during the late 1990s.