You may have heard on several occasions before or read somewhere that trading penny stocks cannot take you anywhere. This can be true for some people depend on how they trade, but it is definitely a false statement for many others. Before we delve a bit more into the details, why isn’t it true or false for everyone? This question may have popped up in your mind as you’re reading through, that’s exactly why it’s here. Although we are all humans and able to think as well as making informed or formal decisions, we are not all the same in our judgement. This difference has an effect on how we do many things including trading penny stocks.
When trading penny stocks there are many factors that comes in play which should be followed very attentively. We do not possess the same level of cautiousness, which is the reason why trading penny stocks result differs from one trader to another. The more cautious you are the more chance you’ll likely have at winning on your picks. It’s all because cautious traders would spend more time researching on companies through which they want to invest.
On the other other hand, a penny stocks trader who does not care about the safety of his or her portfolio would jump and buy any penny stock that he/she spots increasing in price. Enough with all these talks, let’s move on with the subject at hand.
Becoming A Successful Penny Stocks Trader
In order to become successful in penny stocks trading you’ll have to be able to accept losses. I have said the same thing from my previous article, Limit Your Losses In Penny Stocks Trading. This is a burden for many penny stocks traders as they are unable to accept it and cut off their loss before it’s too late.
You’ll have to be able to go against your gut when picking a stock. Your due diligence should weigh more on your decision making, not your gut. You may think that you can never be wrong following your gut, but in reality you’re taking a big risk with your hard earned money. You need to confirm your gut’s feeling with some good research, never buy penny stocks solely based on your gut.
Although some people think trading penny stocks is a gamble, which I am not going to argue about. That does not mean you cannot keep your loss to a minimum. If you really want to be successful in this venture it’s not impossible as long as you follow the right path.
Your emotion should be kept under control at all time. It can either helps or hurts your portfolio, no one can control it for you, but you. Penny stocks traders usually have a tendency to wait when they start losing from their profit to sell. It is always better to just have a plan in place as of the level at which you want to sell your position and take your profit.
Lastly, don’t buy penny stocks because your friend says it’s going to make a killing. Oftentimes those traders are doing the same as the manipulators; they are advertising a stock that they own in order to make the price goes up so they can sell. This is an example of the pump and dump scheme. You have to recognize when you are facing one.
They have given the penny stocks market all the negative names you could ever think of, but the truth is you still can manage to make money trading them. If you know what you are doing you should do fine, just make sure you learn the basics.