www.investing-performance.com

Stock Trading Tips--

View Hot Stocks Like

a Market Maker

Disclaimer

� Stock speculation is very risky and may not be

suitable for you

� Do not trade with more than you can afford to

lose.

� Seek professional investment advice.

� This is not investment advice.

� No warranties, you are on your own.

I started in OTC Trading

at E.F. Hutton in 1966

I noticed stocks had

different characteristics

Price

Volume

Spread

Stock Personalities

Some were lazy and some

jumped around wildly

Before NASDAQ

We used the real Pink

Sheets to find market

makers and call three of

them by phone

Deciding to make a market in a stock

I used fundamentals – the

company had an exciting

business and future =

there will be volume and

price change = market

maker profits

Questions I asked as a market maker

First, who is my

competition?

What market makers were

in the stock?

Types of Market Makers

Volume traders

Value traders

Investment bankers

trading their companies

Who is high bid and low offer

Do these market makers

have an axe to grind?

Spread and volume?

How fast can you get in and

out?

Can you beat the spread?

Shares outstanding and float

Stocks with small floats

tend to be volatile

144 sales coming?

Was it a shell – barred from

144?

Is the end of the holding

period coming up?

Private Offerings?

Look out for Form D filed

with the SEC indicating

private placements

Earnings Announcements

On what days do earnings

announcements usually

hit the market?

Watch for trading just

before those dates

Convertible securities and warrants

Look for convertible

securities and warrants

that could affect the

market – at what prices?

Recommendations

Are there research reports

or investor relations

campaigns? By who and

how reliable are they?

Press releases?

Number of Shareholders

Is the list increasing for

some reason?

Shorts

Is there a short interest?

Are they slamming the

stock down or being

squeezed?

Is it a reverse merger stock?

Are the shell holders going

to dump and how ethical

are they?

Reverse splits, name changes,

business changes

Has the company had

frequent reverse splits,

name changes, changes to

the next trendy business?

Insiders

What percent of the

company do insider hold?

Are they buying or selling?

Is the company buying?

Read their SEC or Pink Sheet filings

What is their status on

Pink Sheet?

Dilution

Is the company thrifty in

handing out their stock or

do they regard it as toilet

paper?

The Principals

Are they shareholder

oriented?

Reputable affiliates?

� Who are the accountants,

attorneys, transfer agent,

investor relations firm?

The Industry

� Is the industry popular?

� What is the company's

competitive position?

The Chart – Tale of the Tape

� Where are the support and

resistance levels?

� Is the stock being

accumulated, marked up or

distributed?

Anticipating news

� Imagine how the company

might develop and what

news might this cause

What am I doing here?

� What is my game plan for

making money in this stock?

� Do I have an edge over

others and if not, why get

involved?

Rules for Investigating

� Dig into what you don't

understand

� Don't stop until you are

certain you have a real

answer you can rely on

Learn more

� Curiosity may have killed the

cat but has saved the life of

many an investor

Learn More – Subscribe Now

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www. investing-

performance.com

Get my books on Amazon.com

� How to Find a Home Run Stock

� How to Pick Hot Reverse Merger

Penny Stocks

� How the Shorts Raid Your Stock,

Destroy Your Company and What to

Do About It

John Lux

� Trader, investment banker,

quantitative analyst, former

OTC market maker and

attorney

Lux.investor@ gmail.comCopyright ©John Lux 2011