I thought that this topic was worth some discussion (or whatever it ends up being if the word "discussion" proves to be too optimistic). Here's a reply I sent to a user who was pointing out how you should take a longer-term view rather than be jumping in and out using technical indicators.
A lot say this and it's a good point, but in my view it really depends.
Here's what I wrote in reply to the user who was steering me towards taking a longer-term view with penny stocks rather than using my shorter-term chart-based approach \ (guideposts and markers being short-term charts, driving into town being longer-term charts and fundamentals). Hope it starts some conversation.
"On the guideposts and markers vs driving into town argument, I've found that a lot of these penny stocks are just pump and dumps, and that in the end there is no town. So because of that you are better off paying closer attention to the guideposts and markers because quite often they end up saying "The town is gone: find a different town".
For fundamental plays, I think that the bigger stocks are better for that. They have an established track record and the fundamentals can be relied on to actually mean something there. These penny stock minnows just aren't well enough established to get even the remotest idea of how things will play out in the future.So it's far safer to play penny stocks with just a chart.
That's my two cents worth on it anyway. I'm saying that to try and stop people getting too badly burnt on these things. I know that most people probably won't agree with that and will have a good go at me for saying so but I think that when it's penny stocks, use charts and don't hang around for too long. Plenty of sharks playing in the penny stock fish tank."
