When talking about penny stocks there is always a great chance that you will hear something about how risky they are. I am not here to go against that because it’s not a myth, we all know it’s true by now. But there are many strategies that have been proven as great ways to cut the losses to minimum. Trading penny stocks is very dangerous, that’s why many people who don’t like challenges try to stay away from this particular market.
I’m going to share with you some of the methods that are very helpful to consider while trading.
Have a Diverse Pool of Stocks to Pick From
Many of those penny stocks traders that are losing more money than they are wining are usually stuck on a very small pool of stocks. It is better to have as many options as possible when it comes to trading penny stocks. Sometimes they think they have more chance trading a stock that they have been playing with for awhile. Though they may make profits from time to time, there is a lesser chance of them making money trading just a small group of stocks than trading with a larger pool.
Trade Based on Newsletter Release
Another aspect that affects many penny stocks traders is trading when a company releases some good news. This can give positive result sometimes, but you should not rely 100% on news to trade a penny stocks.
Don’t forget some companies do the same thing as the manipulators or promoters, not all news released by them will be of benefit to you. Oftentimes, they do so in their advantage knowing that many traders would jump into the boat as a result. Most of the times this strategy works as expected for them because of those traders.
Don’t give them this advantage over you. You work too hard to make your money to throw it away to some rich folks like that.
If you are going to buy shares from a company based on its news, look for other information besides the good news. There might be other factors that may affect this company’s growth negatively, thus causing it to be unable to make you profits.
I guarantee you if you look good enough you will find what they are hiding from you. And once you’ve done so you will be glad you did not buy a single share.
Emotion, emotion, emotion…
This by itself plays at great deal of role in trading penny stocks. What I don’t like about it is the fact that it can be either in your favor or against you. Sometimes your emotion may enable you to make so much money in one day while you were not expecting to make that much.
On the other hand, your emotion can be your worst enemy at time. If you are someone who always trading on emotion, you may find it difficult for you to sell your shares when the time is right. Working on changing this habit could be of benefit to you. It’s better to make some profits than not to make anything at all just because you were holding onto your shares due to your emotion.
Buying Shares While It’s in the Uptrend Position
This is something I used to when I first started trading penny stocks. I lost some money most of the times. When you buy shares of a stock that is increasing in price there’s nothing that can guarantee you it will keep going up. By doing so you’re taking a huge chance.
If you are unfortunate, the price might go straight downward after you have bought your shares.
Trading penny stocks is risky, dangerous, and unpredictable, but with your due diligence you’ll be able to make some crazy money trading.