How did he do it? Not by buying and selling stocks of large and well-known companies like Apple AAPL or Ford F. He's the first to admit that it's a risky strategy. And it's not for everyone. He spends the entire trading day in front of a computer screen, in order to buy and sell stocks at the right time.
He is sometimes in and out of stocks within minutes, and the longest he ever holds shares is a few days. So why trade penny stocks? Many of these companies are speculative because they are thinly traded, usually over the counter instead of on major exchanges like the New York Stock Exchange. The Securities and Exchange Commission warns that "investors in penny stocks should be prepared for the possibility that they may lose their whole investment.
Plus, penny stocks are notorious for being part of so-called pump-and-dump schemes , in which scammers buy up shares and then promote it as the next hot stock on blogs, message boards, and e-mails. Once the stock price is artificially pumped up by all the talk, the scammers sell their stake, leaving unsuspecting investors with big losses. But Grittani has been able to profit because it's such an inefficient market. He knows what to look for and recognizes how to make money out of pump-and-dump scams without doing any pumping or dumping himself.
When investors short stocks, they borrow shares and sell them with the hope of buying it back later a lower price and pocketing the difference. Grittani had noticed shares of a company called Nutranomics, which trade over the counter under the symbol NNRX, had shot up due to what he felt was the manipulation of scammers: Last Monday, Grittani detected that the stock was losing momentum, and he felt that at the very least a small pullback was imminent.
For the past five years, Sykes his been teaching his strategies through the sale of instructional newsletters and video lessons. Grittani first learned about Sykes in early , when he was a senior finance major at Marquette University in Milwaukee. Earlier on in college, Grittani played poker and made wagers on sports games to make money. But he lost all of that over the course of a year and decided he needed to quit gambling.
So he took a shot at investing. Grittani scoured the internet and eventually came upon Syke's story. He spent a few months learning about Syke's theories and eventually started trading.
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The first few months were rough. But within six months, Grittani made his first big winning trade. Figuring that it would eventually collapse, he sold his stake within 10 minutes. Amwest Imaging has since changed its name to Intertech Solutions, trading under the symbol ITEC. The key is to buy them ahead of the crowd," said Grittani.
What does it take to be wealthy? But Grittani and Sykes both go out of their way to point out that trading in penny stocks is not the same as long-term investing.
This is not a strategy for your retirement accounts. With penny stocks, there are patterns that are very predictable.
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Along those lines, Grittani's biggest win over the past few years was a quick trade in Fannie Mae FNMA. While there wasn't a particular news catalyst that prompted him to look at the government-sponsored mortgage giant, Grittani spotted increased volume and activity that suggested the stock would tank and then bounce back.
He plans to continue to day trading for at least another two years before taking time off to travel. Start your day right with the latest news driving global markets, from major stock movers and key economic headlines to important events on the calendar. Daily newsletter, Sunday through Friday. Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes.
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