I think that the invention of internet has made the process of trading stocks very easy. Online trading has been proved to be the most suitable and successful way of trading stock. Anyone can start trading stock online by using the following tips on trading penny stocks or any kind of stocks so to speak.
Many people have been successful in making lots of money from online stock trading. I will share with you 5 tips that will make you a successful penny stock trader. The following 5 tips, which I’m about to provide to you has helped me become a successful trader which I am today.
1 – Know your Charts! When you know how to read stock charts, you will be able to trade penny stocks efficiently and successfully. By knowing skillfully the art behind charts reading, you can easily spot the stocks that will most likely move up or down.
2 – Stop Loss! I don’t know how much to emphasize how important is stop loss when trading penny stocks, most traders overlook its importance. Let me tell you that it should be a habit for you to set stop loss orders whenever you are trading stocks; especially penny stocks or else your entire money on your trading account will go down quicker than you think. Minimize your losses is crucial when trading penny stocks, if your stock is going down don’t be afraid to sell at a loss, I recommend 10% on a downtrend a trader should sell his/her position to minimize losses as low as possible.
3 – Know when to buy! Don’t ever buy a penny stock on a down trend with the perception that it will go back up suddenly after you will purchase it. You should always pick the stock that is constantly on an uptrend and will keep on breaking next resistance. The “buy low and sell high” is just a myth, really when do you know a stock is at its low, so I suggest you get rid of this myth from your mind. The best time I usually buy a stock is when I believe there is strong “support.” If the support is strong, there is less chance that the stock will go down. Beware of fake or weak support, if it breaks you will find yourself on a down trend.
4 – Stay Away from pump and dump! With that being said, don’t ever give much importance to media personalities. I recommend to work independently when trading penny stocks, this is so because not to get caught in a classic pump and dump. Although you should research your stocks before trading it, but forums, stock chat room, message board are not the best places to find good information on penny stocks.
5 – Due Diligence! You should always do your research on your own and not having someone else do it for you. Remember it’s your money so it’s best to make your own decision. OTC pink sheet stocks are very volatile; by researching before investing minimize significantly the risks involved in penny stocks.
If you implement these five tips, you will most likely become a good and a successful trader and so survive the penny stock world. So, do you have any good tips you want to share with us, don’t be shy and comment.