Back in early 2021, I was holding around 50 low-float runners at the same time. That stretch turned out to be the top of the 2021 OTC mania, and one ugly morning taught me the most important lesson I’ve learned trading penny stocks…

Stop chasing the tops and start taking profits. 

The OTC market that year was euphoric. The junk names were all green, and I had quit asking whether any of it was real. I was fully committed, treating a once-in-a-generation run like it would never end…

Then I opened my account and every single position was red. Every single one of them had a morning panic at the same time. I was down on all of it at once, and I had no plan for getting out.

Each of those names had been a real run on the way up. Selling a name while it is still climbing feels insane, so I never did it, and it nearly ended me. 

These days I make good money on names exactly like that, and it all rides on getting out before the top. 

Selling Into Strength

Selling into strength means taking gains while the name is still going up. It’s one of the hardest things to make yourself do, because dumping a winner while it’s still climbing feels like a mistake.

Instead of dumping the whole position at one price, I scale out, selling it down in pieces as the name climbs. 

On SOBR Safe, Inc. (NASDAQ: SOBR)  last month, I sold a chunk of it as it broke one level, another piece as it ran to the next, and the rest into the round number everyone was watching. 

I didn’t wait for that top number to sell it all.

If SOBR had rolled over before it got there, I would have given the whole gain back. Scaling out locks up profit at every step up, whether or not the name ever reaches the top.

Real Company, Or Just A Ticker?

Two big rallies from this month explain the difference I’m talking about perfectly.

Start with Hyliion Holdings Corp. (NASDAQ: HYLN). 

This company has increased revenue by 479%. The stock ran about 30% on earnings and another 40% on the Navy news, up toward $6.So, real company or just a ticker?

HYLN is a real company. The revenue was there (and the Navy actually uses its hardware).

NextNRG, Inc. (NASDAQ: NXXT) more than doubled in the same stretch and calls itself an “AI-driven energy company.”

But if you look closer, you’ll see some red flags. The company stays alive by printing stock, from a few million shares to about 150 million in a year, on convertible notes that reset lower every time the price drops. Even after this rally, it’s still down about 40% on the year.

The whole run was a bounce on nothing. That kind of move gives it all back as fast as it took it, usually faster.

Same question, different answer. NXXT is NOT a real company. No catalyst, just dilution and a chart, so you’ve gotta take profits into the spike and get out quickly.

I’m not saying you can’t make gains from companies that aren’t “real,” so to speak. You just have to know which kind of runner you’re dealing with and plan your exit accordingly.

Don’t Give Your Gains Back

A round-trip is the stock topping out and sliding all the way back to where you got in. Zero gains. 

Why do people do this? They think they’re going to nail the top perfectly. 

I know it’s tempting, we’ve all felt that pull. The stock you’re in is absolutely blasting off and walking away feels like leaving money on the table.

But if you played it right, you should’ve already locked up gains on the way up. 

That’s how I’ve made $30 million* in the stock market.

Stay sharp, 

Jack Kellogg

*Past performance does not indicate future results