Are you thinking about starting trading penny stocks?
Do you really want to get your first plunge into penny stock trading?
If your answer is yes for either one of these questions, then there are many things you should consider before you actually start trading penny stocks.
Penny stock trading is not something that you wake up today and decide that you want to do, then you start doing it right away.
It requires tons of planning to be honest with you. That’s the reason why many beginners have failed at achieving their goal in this market.
To better help you with this method of investing, although many people argue that it should not be considered as investing. I will share my thoughts with you, hopefully they will be able to help you in some ways or another.
The number of traders that win constantly in trading penny stock is low
Timothy Sikes, owner of profit.ly, whom becomes a millionaire trading penny stocks sates that only 5-10% of traders are constantly making profit.
Need I say more about penny stock trading? I want to tell you more though; this market is one of the hardest job you can ever find yourself working in.
You will receive emails from everyone offering list of penny stocks that are about to explode in price, telling you to buy them in other words. How can they be so sure of that?
One thing to always remember is that no one will ever really know the fate of any penny stock. You assume what’s going to happen in a stock’s price according to your research, but you can never be too sure of that.
These people who are telling you to buy this or that penny stock are known as con artists. What do they get out of it?
Those con artists may be either working for the company, or own shares from the stock they are offering to you. Once they get a very large number of people to get some positions, this itself drives the price up. Once the price reached to where they want it to get, they sell all their shares leaving you to lose yours. This is also called pump and dump scheme.
Even worse, some company’s owners are found to be con artists. Those owners are lying about their stocks in order to get our attention. You have to be very careful as to which companies you are choosing to invest your money into.
In an effort to help you avoid being caught from this kind of scheme, we put together a list of some of the penny stocks that are being pumped by con artists. Here is the link to this list, it could also be found at the top of this site.
What are penny stocks?
If you have just started learning about how trading penny stock works, you also need to know its definition.
The name can be misleading because it is very rare to find a stock that’s selling at a penny. Penny stock is defined as any stock that’s selling under $5.00 per share. For example, a stock selling at $4.00 per share is considered to be a penny stock.
A penny stock does not necessarily have to be selling at a penny; the name does not represent it well if you allow me to say so.
Contrary to the regular stocks, penny stocks are traded on the Over-the-Counter Bulletin Board exchange, also known as the Pink Sheets. They are less regulated, some people even claim they’re unregulated. That’s why they are so prone to manipulations by con artists.
Companies that offer penny stocks are usually new and can’t generate enough profits yet. Others offer penny stocks because they’re foreign companies, they are not qualified to be in NYSE.
Is trading penny stock still profitable?
To answer this question, I must tell you that there are many factors that would define your success trading penny stocks.
Yes, it’s still profitable, nothing has changed from its rules and how it’s being traded as of today. unfortunately, your dedication to learn has a lot of weight on whether or not you will attain success.
Jonas Elmerraji states that some traders gain as much as over 1,000%in a couple week’s time. Last December, a high school student made $300,000 trading penny stocks, according to Ben Popper.
These numbers are huge gains, this also support our claim, trading penny stock is truly profitable. But, that does not mean you have to start trading them because you read how traders are so successful, nor because you know of some people who are making tons of money trading penny stocks.
Always think of it this way, if one can win so much money in so very little time, this person could have also lost it all if he was unlucky.
Be ready to lose if you’re going to start trading penny stock
Just because you’re starting trading to make money does not mean you should overlook the fact that you can lose it all. It’s a good idea to prepare yourself for the worse instead of being too optimist about your trades.
Being ready to lose is a good strategy that can lessen the emotional effect on you when you lose. If you want to read more about the psychology of penny stock trading, click on this link as this post is focused about whether or not there are still money to be made in this market.
Do not hold onto your positions after a profit when trading penny stock
A mistake that many penny stock traders make is not selling when they should. I know you will always feel like you can make more, this is just your emotion talking.
The gurus of penny stock trading advise us not to trade on emotion. They’re talking from their experiences, because that itself can cost you a lot.
Put it like this, you never gain any profit until you sell your shares. Just because you see your computer’s screen showing how your money is increasing, it does not mean you have the profit. You only have the profit after you’ve sold your positions.
Trading penny stock is something that attracts many traders because of its ability to generate lots of money in a short period of time.
At the same time it could be the classified as the lowest ranked market to invest due to its volatility. However, you can still make money trading penny stock if you know what you’re doing.
Take you time to learn the tricks, you too should be able to make money trading penny stock.
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