4 Questions To Ask Yourself to Know If Penny Stocks Are For You

Have you ever heard of some people, friends, or family members constantly asking their colleagues about their chances of making it in penny stocks trading? Well, I’ve heard of it countless of times and they are always my distant family members. Though penny stocks trading is not totally a gamble since there are many ways you can utilize to help minimize losses, it’s not too far from being one.

You will never know if you can be a good or even a great penny stocks investor if you do not take the plunge into the pool. Many of you might be asking that same question being asked by many of my folks, the truth is no one would be able to give you a correct answer to it. Nonetheless, there are four questions I will ask you; depending on your responses you would have an idea of what your chances are.

freedigitalphotos.net
freedigitalphotos.net

Have you ever traded in any of the other markets before?

Penny stocks trading requires experience in order to keep up with it. Don’t believe just because it does not cost too much money anyone can do it and be successful. I know there are several stories of people without experience who entered in this venture then later become millionaires. But you don’t know how hard they’ve worked to enable that to happen.

Trading blue chip stocks prior to trading penny stocks has always helped those who have done it. It gives more time to do research on a company because they are not as volatile as the OTC ones. More money is needed to buy them, which is the downside of blue chip stocks and also one of the reasons why so many people prefer trading penny stocks. But they are easier to trade if you are just getting started.

Do you have the time?

Before you start trading penny stocks you need to make sure that you can at least dedicate some of your time for the day you’re trading. Timing is very important, not only to watch the activities of the stock you own but also important to do your research before buying some positions.

Can you handle a loss?

I am not going to lie to you; you are going to lose money if you’re trading penny stocks. There’s no way around that, but you can keep your loss at a low level if you know what you are doing. Some people tend to get discouraged once they lose money trading. If that’s you, I would not advise you to start trading now unless you’re sure you can manage to handle your loss and move on.

Some new traders sometimes don’t do any research on a stock and buy shares from it right after a loss. If they spot a stock that’s currently trending upward, they think they can make the money they have lost from the previous stock. As a result, they quickly acquire some shares without doing any research. This usually happens to new penny stocks traders who cannot handle losses, it’s important that you are not in this category or else you can find yourself losing even more money.

Can you stick to your decision?

Mental decision is very crucial if you are to succeed. Although we have tools that allow us to limit our loss; for example, the Stop Limit Order, certain traders think it’s very advantageous to change the limit as the price is going up. I am not saying it’s a wrong strategy, but I think if you stick to your initial limit you should have more chance at winning than losing.

Did you answer “YES” to all these four questions above? Well, if you did you should know what your chances are at winning in penny stocks trading by now. It’s just plain simple as that; you need experience, you need time, and you need to stick to your decisions.

Please use the comment section area to share with us some good strategies you are using, or have used that are very beneficial.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

2 Comments

  1. By find out more July 30, 2015
    • By P.S.Traders July 31, 2015

Leave a Reply