The .0000s or Better Known as: The Super-subpennies...

By: Tom Allinder
June 16, 2008

As a long time trader of OTCBB and Pink Sheet Stocks, I am always curious as to what other people are thinking and doing with respect to trading. I get very busy at times and go weeks without trading stocks at all and sometimes I do miss it. I really enjoy the challenge of trading in this market; what works one day fails the next day and a new gimmick comes along all the time. People come and go in the low priced stocks but there are some that have been around a long time. I especially like to follow people that are fairly new to the low priced stocks because they often bring new ideas and new outlooks into the marketplace. They have not yet become cynical and believe that every stock in the market is a scam. I was checking Investorshub.com this morning and looked at the new threads. There is a new thread there by an individual that has only been fooling around with low priced stocks for 2 years. This new thread is all about the stocks trading at hundredths of a penny. Three zeros after the decimal before you reach the first whole number.

I didn’t know stocks were quoted that low…



Most market participants consider trading stocks at the super-sub-penny level insanity. Those people outside the market that I have described this sort of trading to, have a hard time comprehending stocks trading at this level. Many people cannot wrap their heads around a stock trading at .0001. .0001 represents one one-hundreth of a penny; 100 shares of a stock at this level equals a penny. But, let me tell you, for those that know what they are doing, this is the greatest reward-risk situation in the market.

Limited downside, unlimited upside

Realistically, how much is a person willing to bet on a super-sub stock? My own personal strategy is to put no more than $500-1000 on them. Let’s say the stock is trading at .0001 on the bid and offered at .0002; 2.5 million shares will be $500 worth of the stock. My downside is $500; no more; my upside is unlimited though. On a number of occasions over the last year, I have seen stocks go from .0001 offer with no bid at all up to the .0005 and .0006 level. Some have moved even higher. So, a $500 bet placed on one of these stocks will yield a double for every one-hundredth of a penny advance on the original principle. Let me make the point again: My downside is fixed and my upside is unlimited. In my own personal experience, in 10+ years of trading, I have lost my entire principle only twice and both times it was on stocks bid at 0 with offers of .0001. But, on several other occasions, I have made huge profits which have way more than offset those losses.

Big Winner

GoldSpring (OTCBB: GSPG) is the biggest winner in years to come from the super-subs. In late September of last year, GSPG was trading at the .0004-.0005 level. This last week, GSPG closed the week at .025 with a high of .035. This is like a $5 stock going to $350 a share. It’s not realistic to think that anyone that bought at .0005 is still holding the stock or sold at the high this last week but what if they did? That $500 bet placed on GSPG would have gotten you 1 million shares. Those 1,000,000 shares at the high this last week would have been worth a staggering $35,000!!! A profit of $34,500. Now that… is insane! So, the next time you are considering that people that trade the sub pennies and super sub-pennies are crazy, remember these sorts of numbers…

Tom Allinder
NewRiverFinGrp.com
tom@newriverfingrp.com

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