MGT Capital Investments (MGT) was a penny stock that got pumped by another billionaire over the past week. On May 6th the stock was trading at $.36 and yesterday the stock topped out at a whopping $5.58 for a 1450% gain in just 6 trading days! Last year there was a new trend that occurred in small cap stocks whereby billionaire investors realized they could manipulate various small cap stocks by taking a multi-million dollar position and then disclosing it to the public causing a huge short term spikes in these companies. First it was Carl Icahn, then Oprah Winfrey, then George Soros. Now we saw billionaire John McAfee, the creator of McAfee antivirus software disclosing that he has agreed to join MGT as executive chairman and CEO. The reason why this scam works so well is because the uninformed general public have no idea what they are doing and therefore they just follow what the media or some other clueless person tells them is a sure thing because they don't think the media can lie or make things up. Day traders also like to jump on board anything that has a lot of attention and volume and this is a perfect recipe for moves in both directions in a short period of time. 

Now my strategy for these type of trades is fairly straight forward. I want to find these stocks as early as possible using my intraday scanner and then look to get long with a core position. On the first few days I will be looking to scale out of my position. The only shorts I will take are on a stock which moves way outside it's mean, but these will only be scalp trades because the momentum almost always calls for higher prices over the coming days due to the lag in dissemination of market news to the general public which usually takes at least 2-3 days. Noting this I am able to craft my plan and utilize my trading system to choose the optimal times to enter and exit. 

The second big trade I like to take is a breakout to new highs above the previous high reached during the first spike which will usually come about several days to a couples week after the initial spike. The momentum and attention from all the buyers that missed the first move will certainly push a stock higher in the coming hours and days. Not to mention day traders love to keep them momentum alive in these high volume stocks which usually means they can move a lot more than you would think. 

In this case the break of the $1.87 high in MGT is what sent the stock up more than 150% over the next 3 days before plummeting 60% in one day! Despite what you might believe, this is a predictable pattern which is exactly the sort of thing which has helped me to earn a fortune and keep away the 9-5 job over the past 14 years... Now some may say why wouldn't you just buy and hold a stock like this and again this should be very clear when you look at the chart below and see the huge red candle. The fact is it's not that hard to enter a stock and have it go up big in a short period of time, but if you don't have a system for choosing when is the optimal time to close out your trade and lock in your paper profits,  99% of the time you will end up giving back all your profits. 

Greed may seem to be helpful when it comes to maximizing profits but the problem is it's way to easy to keep telling yourself you are going to hold out for a little bit more profit and then BAMMM! You watch the stock drop 50% and you give back sometimes ten's of thousands of dollars in minutes. Successful traders know that it's much better to go for base hits rather than swinging for home runs and this is why traders like myself are able to earn consistent profits at the expense of all of the inexperienced people whom get burned nearly every time. Don't end up getting burned. There's a science to extracting profits from penny stocks like MGT and I can show you exactly how it is done. If you understand how these stock moves and which areas of supply and demand could cause large turning points, you can literally get rich over time trading these type of stocks. Seriously...