Considered to be the most explosive opportunity of making money online, penny stock trading has gained tremendous popularity since it's unveiling. When we talk about penny stocks, we are talking about those stocks that you can buy at $ 5 or below per share. Here are some tips on how to make money on penny stocks:
1. Follow a specific guideline
You should not enter the stock market blind folded. Having a specific guideline will give you an indicator and help you evaluate a specific stock. If it doesn't fit the criteria of your guideline, don't buy the stock. You should stick with your guidelines no matter what and avoid buying stocks just because a friend told you about it.
2. Know when to get out
The problem most traders face is that they don't know when to stop. A wise penny stock trader will not allow losses to file up by chasing after stocks and adding to their position. The best thing to do is to know when to exit the stocks and re-enter when your indicator gives the buy signal.
3. Trade only with good volume penny stocks
Avoid trading with low volume penny stocks because you will have difficulty exiting from it. Look for share averaging 1,000,000 shares per day. If you can find stocks with more shares per day so much the better.
4. You should diversify
Investing on one single stock is a recipe for disaster. Considering the size of your portfolio, you should avoid putting 10-20 % of your money on any single stock. The reason behind diversifying is that, if one of your stocks drops, you still have others to back you up.
5. Use automated stop orders
If you can not attend to your stock on a regular basis, you better use and automatic stop order. You should not allow market downturns to have a great impact on your account. But the better option would be to steadily monitor your stocks during trading hours.
Perhaps that most important aspect on how to make money with penny stocks is being disciplined. No matter how good your system is, if you don't follow it diligently, it will fail. Know also how to control your enthusiasm. We all experience that, when we get too excited about something, we lose our rationality and may proceed without considering the facts. If you do that with penny stock trading, you will end up getting broke.
Stock Brainiac will provide you more information about how to buy penny stocks.
1. Follow a specific guideline
You should not enter the stock market blind folded. Having a specific guideline will give you an indicator and help you evaluate a specific stock. If it doesn't fit the criteria of your guideline, don't buy the stock. You should stick with your guidelines no matter what and avoid buying stocks just because a friend told you about it.
2. Know when to get out
The problem most traders face is that they don't know when to stop. A wise penny stock trader will not allow losses to file up by chasing after stocks and adding to their position. The best thing to do is to know when to exit the stocks and re-enter when your indicator gives the buy signal.
3. Trade only with good volume penny stocks
Avoid trading with low volume penny stocks because you will have difficulty exiting from it. Look for share averaging 1,000,000 shares per day. If you can find stocks with more shares per day so much the better.
4. You should diversify
Investing on one single stock is a recipe for disaster. Considering the size of your portfolio, you should avoid putting 10-20 % of your money on any single stock. The reason behind diversifying is that, if one of your stocks drops, you still have others to back you up.
5. Use automated stop orders
If you can not attend to your stock on a regular basis, you better use and automatic stop order. You should not allow market downturns to have a great impact on your account. But the better option would be to steadily monitor your stocks during trading hours.
Perhaps that most important aspect on how to make money with penny stocks is being disciplined. No matter how good your system is, if you don't follow it diligently, it will fail. Know also how to control your enthusiasm. We all experience that, when we get too excited about something, we lose our rationality and may proceed without considering the facts. If you do that with penny stock trading, you will end up getting broke.
Stock Brainiac will provide you more information about how to buy penny stocks.
No comments:
Post a Comment