Knowing
how to trade penny stocks really comes
down to a matter of basics. Basics must be followed for trading in the world of
penny stocks to compensate for the fact that it is an extremely volatile
market in which people can lose anywhere from thousands to millions of
dollars.
The first important basic step for
how to trade penny stocks
involves selecting a reputable broker. You want a broker who checks out
with your state's Securities commission, and preferably a discount
broker--one that only executes orders for a fee, rather than one
that
does penny stock recommending and research which cost you much more money
in commissions and fees.
Next, if you are a new trader who is just learning how to trade penny shares, be careful with how much money you invest and with how
much profit you demand of yourself to make with each trade. Start out small
in both areas and get practice and experience under your belt. In six
to
12 months you'll know far better what you are doing and you can turbo up
your penny stock investing. But when you begin, put discipline and
loss avoidance above and beyond greed. Too much fear is bad, yes, but with
this unpredictable market too much greed when you are just beginning can lead
to a total nightmare scenario.
Don't forget to follow the same investment rule for penny stocks
as you would for larger stocks: don't put all your eggs in one basket.
Diversify your penny stock portfolio as you would any investment
portfolio. When it comes to the fundamentals, there is nothing
dissimilar about
trading penny shares.
Learning
how to trade penny stocks means learning how to do your
own research. Pay attention to published tips and maybe even subscribe
to
some newsletters, but don't let them control you. Always do your own thinking and follow up every "hot tip" with your own research.
Who can show you how to
trade penny stocks in a successful way
better than a mentor? Find someone who has already done what you are
doing--someone who has had the kind of success that you are dreaming of.
This mentor may be a penny stock website, blog, or newsletter. But make
sure that your choice in mentors is an experienced and consistently
successful one.
Remember to take your time when learning
how to trade penny stocks.
If you have only been doing this for a few months and you make many consecutive big winning trades, don't get too excited and lose
your focus on the basics. Just keep doing whatever you were doing up to
that point so you keep the consistent profits coming in.
One of the unique things concerning how to
trade penny stocks
is capitalizing on the high volatility of the market. Penny stocks
aren't financial vessels for long-term investors. You can double or
triple your ROI in as little as an hour. Do not use the buy-and-hold technique
used
for Blue Chips and other macro cap stocks. Sell and take your profits.
If there is any big difference in trading penny stocks and macro caps,
it's the speed at which you make trades.