Bill Panetta Education

1. 50% Rule

2. Profit management: I have a profit what should I do now?

When you have a profit there are so many things running through your head. Your nervous your sweating bullets.

You can talk to 10 successful traders and you might get 10 different answers on this subject. And BTW if any TRADERS want share there profit management strategies with us please feel free to do so. This is what this weekend is all about.

For me Profit Management is real simple, a lot of it depends where I buy the stock. If I am buying near the 5 & 10 moving averages or a stock like PLKC a break of the 200-day moving average those are my favorite and easy to manage.

I can sell everything because I feel it has reach a resistance level that I thought it would not break. HRCT was great example went right to my target of .79-.80 area and slammed right back down. A starbucks play for me.

You always hear this one: sell 1/2 when you double your money: I have a slant on this one: I sell 1/2 when I a have profit.

Again I am trying to take the emotions out trading and this has done it for me personally.

Sell 1/2 when you have profit: what is the theory behind it. When you sell 1/2 when you have profit it accomplishes one thing immediately: it gives you a winning trade a guaranteed profit on the trade, and that's all I am looking for.

PFCE: bought @ .40 sold 1/2 @.60 CYGN: Bought @.66 sold @ 1/2 .80

1- I locked in a profit 2- I am guaranteed its a winning trade why? Because if it came all the way back down to my original buy price I still win. Now here’s the beauty of the whole thing if PFCE goes 2.00 & CYGN goes to 5.00 guess what I win.

Then on the rest of my position all I have to do is follow my momo guidelines: 5 & 10 day moving averages and 50% rule.

The main point of this concept is you always put yourself in a position to have a winning trade. It's a win win situation for me.

3. The Opening Bell by Bill Panetta

Probably the hardest part of the trading day for most new and basically any trader is going to be the first 15 minutes of the trading day.

There are lot emotions that run high during this period. For me personally I have always tried to find ways to try and keep my emotions from getting out of control so I don't make bad trades. Especially in the first 15 minutes of the day.

Through trial & error over the years I have come up with some strategies that work for me.

THE 10-MINUTE HEAD FAKE ON THE OPEN: I am starting to see this more and more now. This Market Maker Tactic (IMHO) is to shake out a lot of weak longs especially in a hot stock.

I will give you to 2 great examples of this trick.

AGIS: yesterday (11-07-2003) first thing MM"s did is they gapped it down, that was there first scare tactic. Now what we are going to focus on is the opening price for agis.

The opening price was .271 first print of the day. Remember stay focused on the opening print .271. Here comes the 10-minute head fake. The stock makes a low @ .20 in the first 10 minutes of day. I am watching this all happen on my level 2 screen BTW. AGIS makes a bottom at @. 20 now here is what I am looking for on a reversal. As soon as I saw the reversal happening I started buying in @ 23-24 and picked up 10k shares for this trade. Remember pay attention to the opening price of .271. That is my guide through this whole process.

Once AGIS traded through the opening price of .271 the stock exploded and within basically 1 hour of the trade it traded as high as .75 cents. I had personally had gotten out .70 and I was done for the day. This trade will last usually 1 hour.

What are the key points? Stock makes a bottom in first 10 min. then comes back and trades through and closes above .271 the opening price within about 5-10 minutes after it making the bottom at .20. My stop loss is .20 if breaks .20 I am out for a small loss. My risk was $400.00 but my reward was over $4500.00.

Another point I will make is I will only make this type of a trade in a hot stock that has a lot of volume. A lot of liquidity.

Another point is it that the stock has to be above the 5 & 10 day moving average for this kind of trade. It has to be in full motion.

FNIX: (11-03-03) Another great trade. The 10-minute head fake was on this stock as well. Opening price .93 within 10 minutes makes a bottom @ .83 I buy 10K shares @ .86 again are main focus is the opening print of .93. The stock explodes through .93 the opening price and hits a high of 1.19 within 1 hour of hitting a bottom. The MM"s can kiss my butt. Money in the bank. More head fakes please. You need to use level 2 for this type of trading, if you don't have it get it. Risk 300.00 Reward 3,000.00

GAPS: How do you play the GAPS? Are they real or fake? Is it really a GAP & RUN or a GAP & TRAP? These are tough questions to figure out & answer.

For me what I look for in GAP is the strength of the gap. Is it an outside gap or inside gap? For me I want to see an outside gap. What is an outside gap? A gap above the previous days high and hold it without coming back down. For me the first 3-5 minutes of the morning are critical on a gap. I focus intensely on the opening price of the day and the low of the day the first 3-5 minutes. What I am looking for on a very strong gap is for the open & lows of the day to either be equal or to be within 1or 2 cents of each other and it has hold that the first 3-5 minutes.

Here’s great example

AZAA: Thursday 11-06-2003

GAP & RUN: stock closed on Wednesday @. 85, the next day it opens @ 1.01. Strong gap. It's an outside gap very strong. Again first thing is we look at is the opening price of 1.01, secondly I am watching the spread between the opening price and the low of the day which 1.00. It held that spread for the first 3-5 minutes, bammmm 25 minutes later it hit 2.00.

The main focus was the spread between the open and the low of the day in the first 3-5 minutes of the trading day. If you go into this type trade or if you're in the trade already in this scenario your stop loss becomes the low of the day off that tight spread.

EXTI: Friday 11-06-2003: Another great trade. I made bank on this on Friday as well. GAP & RUN: The stock had fantastic news. Another outside gap. The previous day close was at .84 then opened the next day @ .89 well above previous day high of .86. Now I am watching how it trades around the opening price of .89. Remember everything revolves around the opening price of the day in the first 15 minutes. Remember your watching this on your Level 2 screen.

Open is .89 now the low of the day is .885. I have my tight spread that I am looking for in the first 3-5 minutes of the trading day, and watching this develop with level 2. As soon as I got my tight spread set up I bought 10k shares @. 92. All I have to do know is make sure it does not break the low of .885 that's my risk. In one hour it hit a high of 1.15. My exit was .1.12. My risk was 400 my reward 2,000.00 one hours work.

**** I will only make these kinds of trades if the stock trades above 5 & 10 moving averages.

GAP & TRAPS: The only thing I will mention about a trap is if a the stock gaps up and stays flat for 10-15 minutes and you see the high of the day equal to the opening price chances are it's a trap. Another words if XYZ stock HOD is .50 in the first 15 minutes and the opening print is .50 and the low is .48 after 10-15 minutes and you see it break the low. 48 watch for the trap. USXP is a great example Friday 11-07-2003.

Other traps I see on regular basis are when I see stocks being promoted via email by pump houses. You get the initial gap it holds up 10-15 minutes then comes the trap. ask your self these questions.

Does it trade at least above the 32, 10, 5 daily moving averages, at least you know it’s an up trend. If not, don't touch it.

This should help you guys understand the opening bell a little better.

4. 200 Day Moving Average Bottom Play

5. How to Spot a Bottom in an Up Trend

6. On Balance Volume Indicator

7. Stocks That Make Explosive Moves Stochastics

8. Penny Stock Market Makers Who Are the Players in this Game

By Bill Panetta

Let Me Start off by saying this: Level 2 Does not have the same effect like it did 5 years ago except for OTCBB Stocks & Pink Sheet Stocks. What Do I mean By This? NASDAQ is all chart plays, level 2 has no meaning as it once did for NASDAQ Stocks, and too many games can be played now on level 2. Simply put if you don't know how to read the charts you will get killed on NASDAQ Stocks.

With all the changes on Level 2 Traders have been forced to learn TA, You could had a made a killing with level 2 before 2001 with out TA; I have witnesses that have proven this.

And when I make this comment I am talking about regular trading hours, after hour's different story. Bottom Line Level 2 does not have the same effect on NASDAQ Stocks that it did 5 years ago because of the New Super Soes Trading System being implemented in 2001 and along with 1 cent spreads, it was the worst thing NASDAQ ever did for traders IMO. The Traders from 5 yrs ago know what I am talking about.

Let's talk about the 2 exchanges where Level 2 has not changed and having level 2 is really important to your trading. I am talking about The OTCBB & PINKSHEET Markets.

If you learn how to read into Level 2 on the OTCBB & PINK SHEETS it will really enhance your trading. Let's break down the Market Markets.

There are 2 categories of Market Makers let's talking about the first one.

Retail Market Makers:

These are the market makers from very popular brokerage firms. They handle a lot of the order flow for small retail investors.

NITE: NITE

SCHB: Schwab

TDCM: TD Water House

SBSH: Smith Barney

MLCO: Merrill Lynch

ETRD: ETRADE

GSCO: Goldman Sachs: New Kid on the Block, very active lately.

This is the list that you really have master because these are the MARKET MAKERS that handle promotions, insider transactions also S-8 and CD Transaction.

CD: means Convertible Debentures they are loans the come due and get sold into the market by the loaning company.

There are lot market makers in this category so I will break it down to who are the most important: These are some of the more active MARKET MARKET MAKERS on the street:

FANC: major S- 8 player: if there is an S- 8 on a Stock most likely he will be there on the ask until it dries up

HDSN: major CD Seller Handles a lot CD transactions.

VIEW: love when he’s on the bid

DOMS

MAXM:  one of favorites: smart money more like a trader than market maker replaces GNLN for now.

VERT:

CLYP: heavy seller if you see him on the bid it's unusual

HILL:

FLCR:

SACM:  love when he’s on the bid

JEFF:

VFIN:

AYME:

STCS:

ABLE: like when he’s on the bid

PBLC

VFIN

PERT

BKST

BNCH

ECN MARKET MAKERS

ARCA (formally GNET): very active used by traders market makers any one can use ARCA you have to know what your are doing. If you have access to ACRA trading system you can use the ecn.

TRAC: owned by my track if you trade with my track you can use this to place your trade as a liquidity outlet same 4 data

DATA: owned by my track same concept as GNET & TRAC

There are probably a few market makers that I left out or there will a few new market makers that show but for the most part these are the major players. Good luck hopes this helps.

Bill