When you hear “Penny stock trading” you automatically think about how easy it is to make a large sum of money in a very short period of time. But at the same time, if things are not working toward your way you can lose very largely.
It’s easy to win as well as easy to lose when you’re engaging in this market. For this reason, you have to be completely sure that you want to get involved in penny stocks trading.
Penny stocks trading is a venture that requires lots of knowledge. Although we try to learn as much as we can in order to trade successfully, we often find ourselves making decisions that hurt us in return.
We will always make bad moves in penny stocks trading, but there are many aspects that are able to help us cut our losses.
We often lose money because of our bad habits, this is something that I always say, and I will always say that. Our actions has caused us to lose so much money. Given that we are a part of the factors that losing us money, we should be able to do something to diminish our losses.
Are you trading with emotion?
We all have emotion, it’s completely normal; it would actually be abnormal if we didn’t have emotion. However, our emotions should be put aside when trading if we want to win through our trades.
Penny stocks trading does not work well with emotion. When we trade according to our emotion we make silly mistakes, those mistakes usually cost us a chunk of our portfolio.
In this market, we trade on very short notice. We usually trade by coming from one stock to another, which may leave little to no time to think, especially if you don’t have a stock watch list.
Stock watch list is very important in this sense because it can help you not to pick stocks that you have no idea of.
Your emotion can be your worse enemy in this market. You have to train yourself to be able to trade without having to deal with your emotion.
Don’t be greedy when trading
Being greedy is not healthy for your portfolio, it’s better to cash-out with your minimal wining than to lose it trying to gain more.
We’ve all been affected this way before, some of us have learned from this experience and corrected that, while others still staying and committing this same mistake.
Looking to make more money when you’re wining in penny stocks don’t usually turn out to give a positive result. Take your profit while you can because the volatility of this market is too unpredictable.
It’s even better to try to get your profit as early as you can because some times it’s very hard to sale and get out. If you have not experienced this before, I hope it never happen to you.
Know when you should and should not trade
Just because it’s called day trading, it does not necessarily mean that you have to trade every day. If you’re one of the traders who are making this mistake, I suggest that you stop and try to find your own strategy that could signal you when and when not to trade.
Even if you have a stock watch list, you may not be able to trade on a daily basis. Heck, even the successful traders spend days with no action; you know why? Because their strategies don’t tell them to do so.
With that been said, you have to create your own strategy and follow it. All successful traders have a strategy that was created by themselves. You can follow someone else’s strategy, but one that was created by you is always better and easier to follow.
Moreover, I don’t think anyone would let you use his or her strategy without charging you a fee to do so. Creating your own is free, you just have to invest your time in it to create it.
Do not trade right after a loss
Stop yourself from trading right after a loss. I know it’s easier to say than to do, but you’re the only one who’s in control of yourself. I can only advise you on what to do, but I cannot enforce you to do anything.
Trading right after a loss can result in losing more money because you’re trading on emotion. I have just shared with you what trading on emotion can do. It’s in your advantage to try not to trade after you have lost your money.
Instead, take your time to reflect on the loss. Try to find out what was the factor that causes you to lose your money.
Knowing the reason for your loss can help you not to make the same mistake over and over again. Try to trade as smart as you may possible can in order to stay alive in this market.
Be patient after a big loss
I know it’s difficult not to try to win your money back as soon as you can, but in order to trade successfully you need to be patient.
It is a common mistakes made by many traders but it’s better to be patient; Napoleon Hill states “Patience, persistence and perspiration make an unbeatable combination for success.”
We have to treat trading like a business not a hobby – and sometimes waiting for the right entry is part of the business.
This is another quote from Option Alpha, which I truly support.
Several young and new traders treat this market as a hobby. They primarily do so because of the feeling it gives them when they’re winning not taking in consideration the feeling of losing.
Anything that involves money should not be taken as a hobby, no one earns money easily, I have not come across someone who earn easy money yet.
If that was the case, I would not be here writing about penny stocks trading which is a very difficult way of making money.
It does not matter how you earn your money, you will always have to work hard in order to do so. There should be no reason for you to use your money as hobby tokens.
Yes, penny stocks trading is dangerous.
Yes, it’s very volatile and requires constant observation.
But, there are many paths through which you can change your experience trading penny stocks. the very first one is to know what you’re doing. research the market to know what it takes to trade successful.
Have control over yourself, and don’t get pushed by your emotion to make dangerous acquirement.
If this post was helpful to you, don’t forget to use the sharing buttons to share it with your colleagues.