Penny Stock And Trading Tips
By Michael Cohen
Penny stocks are a tough market to make money in. That's
because they are often traded on the otcbb market, with less
rules than bigger shares. So it takes some special
knowledge to gain the edge that leads to profits.
Let me give you some tips that will greatly improve your
chances of profits with penny stock trading.
Be willing and able to lose it all.
Penny stocks trading is dangerous, with prices moving
50-100% or more very quickly in either direction. If you
are comfortable seeing your 10 cent share selling for 5
cents a moment later, then you can trade penny stocks. This
is why you must be ready to lose it if you trade the penny
stocks.
Because most trading markets are very unpredictable, make
sure that you use money you can afford to lose. It is too
risky to invest money that you badly need very soon for your
daily living or for your family. Always calculate the risks
involved and what you getting into.
Do not use leverage when trading penny stocks.
Leverage lets you play the markets with borrowed money, and
if you lose that, you end up not only losing everything, but
also owing even more - so never play with penny stocks with
margin.
It is better to buy a few more shares once you are into
profit, rather than running on borrowed money. Luckily,
nearly all brokers now refuse any margin buys with penny
stocks.
Understand the market before you trade.
Knowing the market conditions before you buy is a real
advantage. It lets you know what might happen unexpectedly,
and can lower your risk if done right.
When you have a good picture of the market situation, you
can easily lay down a plan for your trading. Things will be
easier for you to know what to expect and what to do when
you have a good idea about what could happen. This lets you
trade with less emotion, just like a real pro.
Set up goals for how long you will be in the trade.
Knowing beforehand how long you will be in the trade will
help manage short term fluctuations. If you are day
trading, then sudden changes can motivate you to sell, but
if you are using buy and hold strategies, short term
movements will not cause you to sell suddenly.
Penny stocks are notorious for large, sudden movements, so
be sure you know when you want to sell, both for profits,
and for losses. That way, you will not miss you chance to
cash in when you penny stock makes that sudden temporary
movement.
Making big profits in small shares is possible - just like
Andrew Carnegie did way back when. It is very risky, but
with the right knowledge and rules to trade by, you can
greatly improve your chances of good profits.
Make use of all the information you can get, like news
reports, directory biographies, product information and
competition, as well as technical analysis of the stock
price movements, and fundamental analysis of the company.
Apply these rules, and you too can profit in penny stocks.
Get a lot richer by discovering these
penny stock
secrets.
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