How to Trade Penny Stocks - The Basics Made Easy
Penny stocks are a whole new world unto themselves.
Yes, they share some characteristics with the stocks listed on the larger exchanges but overall penny stocks require a different set of attitude, approach and thinking to investments.
Fortunately, there are ways with which you can start on the right foot, tips to trade the right way and places to trade with the right small-cap stocks.
Start Out On The Right Foot You have to start out on the right foot with these stocks or else be wiped out in considerably less time than it took to carry out the investment transaction.
Yes, that's how risky penny stocks can be when you do not understand these stocks first before pouring your hard-earned money into them.
So the first order of the day will be to understand small-cap stocks in terms of its language, risks and rewards, past results and future expectations and, more importantly, the science of trading.
There are a lot of resources that can be found in many libraries and online sites.
Then, you have to determine your investment objectives and goals both in terms of the penny stocks in particular and your investment portfolio in particular.
The best tip in this case is to expect realistic returns because penny stocks are definitely not the way to giving Warren Buffett a run for his money.
Of course, you should choose the small-cap stocks you are most interested in with the most potential for good returns on investment.
Again, the need for research and analysis coupled with the instincts that come from experience as the guides in choosing the right stocks cannot be overemphasized.
Trading Tips When you have your feet wet in penny stocks, you will realize that aside from the theoretical research and analysis aspects, there are practical tips that have served many investors well over the years.
These practical tips include the following: * Don't fight the trend - A simpler way of saying this is 'The trend is your friend'.
Going against the trend could quickly decimate your portfolio if you haven't done your research properly.
So, do the best research possible and stay alert to the market movements.
* Get in and out with purpose - It is necessary to follow an entry and exit plan otherwise you will be tempted to invest in penny stocks that are not on your plan and, hence, lose big money.
* Don't put all your money in one investment - There is no 'sure thing' in the investment world.
Contrary to what anybody tells you.
This will always hold true.
Allocate only a small percentage of your portfolio 10% or less to penny stocks.
Yes, they share some characteristics with the stocks listed on the larger exchanges but overall penny stocks require a different set of attitude, approach and thinking to investments.
Fortunately, there are ways with which you can start on the right foot, tips to trade the right way and places to trade with the right small-cap stocks.
Start Out On The Right Foot You have to start out on the right foot with these stocks or else be wiped out in considerably less time than it took to carry out the investment transaction.
Yes, that's how risky penny stocks can be when you do not understand these stocks first before pouring your hard-earned money into them.
So the first order of the day will be to understand small-cap stocks in terms of its language, risks and rewards, past results and future expectations and, more importantly, the science of trading.
There are a lot of resources that can be found in many libraries and online sites.
Then, you have to determine your investment objectives and goals both in terms of the penny stocks in particular and your investment portfolio in particular.
The best tip in this case is to expect realistic returns because penny stocks are definitely not the way to giving Warren Buffett a run for his money.
Of course, you should choose the small-cap stocks you are most interested in with the most potential for good returns on investment.
Again, the need for research and analysis coupled with the instincts that come from experience as the guides in choosing the right stocks cannot be overemphasized.
Trading Tips When you have your feet wet in penny stocks, you will realize that aside from the theoretical research and analysis aspects, there are practical tips that have served many investors well over the years.
These practical tips include the following: * Don't fight the trend - A simpler way of saying this is 'The trend is your friend'.
Going against the trend could quickly decimate your portfolio if you haven't done your research properly.
So, do the best research possible and stay alert to the market movements.
* Get in and out with purpose - It is necessary to follow an entry and exit plan otherwise you will be tempted to invest in penny stocks that are not on your plan and, hence, lose big money.
* Don't put all your money in one investment - There is no 'sure thing' in the investment world.
Contrary to what anybody tells you.
This will always hold true.
Allocate only a small percentage of your portfolio 10% or less to penny stocks.
