Easy and effective ways to make profits by trading penny stocks

Penny stocks can easily grab your attention when you are at the receiving end. You always think, investing in penny stocks will mostly reap you benefits, true. But what you do not know is that even by trading the penny stocks, you could make benefits. This can only happen under one condition when you have got the right trade and you know the ways to trade a penny stock. If you are not aware of the later, following are some of the easy and effective tips that would save you from any frauds and losses, and would rather help you gain some profits.

Never listen to company management:  They say, do not believe what the companies say. Because they would always appreciate themselves to fetch more stock buyers. When it comes to stock market, you need to be very wise. You cannot trust anyone. Companies might just raise their money to get their stocks up and stay in business. This is what you should be most careful of. 

Focus on penny stocks with high volume:  Stick with stocks that trade at least 100,000 shares a day. This must be done because if you trade stocks with low volume, it would be difficult for you to get yourself out of that position. They should be at least above 50 cents per share. Below this, the shares are not liquid enough to be in play.

Buy the best of the bunch:  You must always buy the stocks that are having good earnings. But this is not as easy as it seems to be. The biggest challenge here is to find such stocks out of the lot. The best way to do this is to look for shares that are breaking out to 52-week highs on volumes that is at least a quarter million shares a day. Invest wisely.

Don’t trade large positions:  Be careful with the position sizing. The best thing to have a control over this is to plan, not to trade more than 10% of the stock’s volume. This will help you to limit your share size so you can get out of the stock faster.

Don’t fall in love with a stock:  If you enter the penny stock arena, be cynical, do your own research, and diversify, even if a friend or family member is touting a stock.

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What are penny stocks and how can you make money with stocks?

You might have seen on various TV shows on business channels, they always talk about the stock market and you can understand that the stock market has captivated the people from around the world with only one motive in mind, of making profits. Haven’t you always wondered what is it all about and how could you make money out of stocks?

There is one thing that could help when it comes to huge gains, penny stocks, otherwise, there are many risks, and might fall into the trap. Penny stocks will help you quickly see the hostile spears in prices which will further help you ear very large gains in a very short period. One could buy penny stocks from various places like the penny stock chat rooms, penny stock message boards, or even penny stock websites. 

If you have been wondering in which sector shall you buy penny stocks, do not worry. Some of the best penny stocks that you can consider buying are currently in biotechnology, marijuana, technology, and in precious metals. It is important to understand that when it comes to top penny stocks, it is only about playing the momentum of the market and about the timing. It is more important to know if you are making a debut with penny stock day training.

Down the line, you might hear many traders say to you, “don’t get married to the stocks”. Trust us, this is true in most of the cases. What is more important is that you must develop your own system and stick to it. The times when most traders lose is only when they deviate from a trading system. So, you must avoid doing this. 

Let’s take an example to understand this better. For instance, a stock increases by 10% and if you have $1000 worth of the stock, you will have a paper gain of $100 before the trading fees. Now if you have a system that says ‘sell at 10% rise”, you would make a great profit. But if you sit back, do not stick to your trading system, and think that you shall wait for the stock to even rise more, you might just end up losing all. This is because, in a stock market, you have volatility. The market can move up as quickly as it may come down.

Remember, to earn huge out of stock, all you need to play well is with the momentum and the timing.

Continue reading What are penny stocks and how can you make money with stocks?