The idea of trading penny stocks (any stocks that trade for less than five dollars) is enticing to many people because of the idea of making a short term, minimal investment but potentially receiving high rewards.
Several people have become self-made millionaires through investing in penny stocks. Timothy Sykes’ millionaire challenge course even promises to make you a millionaire through penny stock trading if you follow all the tips and strategies the course presents you with.
That being said, you’re probably mistaken if you believe you can get into penny stock trading in the next minute and become a millionaire in the coming weeks. You have to understand how penny stocks work and smart trading strategies so you can avoid losing lots of money like most new penny stock traders do.
Here are the top penny stock trading hacks for new investors:
Hack #1: Don’t Get Emotional
The number one rule to follow when investing in penny stocks is to not get emotional. This means to never fall in love with a company or a particular stock. This will only serve to hinder you from seeing the true value of the stock and makes you more vulnerable to taking losses.
The key to winning in trading is to be logical rather than emotional. Look at a company’s value and potential rather than what you specifically love or don’t love about the company. You must learn how to separate your emotions from your investments.
Hack #2: Study The Company You Are Considering Investing In
Another key hack to follow when investing in penny stocks is to research the company you are considering investing in. Specifically, you want to look at their history, the fundamentals of the company, and their earnings patterns. There are several great companies out there that have penny stocks and will make for a solid investment.
Hack #3: React Fast
In the world of penny stock trading it’s perfectly possible to make a profit of fifty percent or more than lost double that in the next few hours or even minutes. The point here is to react fast and don’t be greedy. Take your profits quickly and then move on.
Hack #4: Only Invest In Stocks With A Large Trading Volume
You’re taking a major risk by investing in stocks that only get a few hundred trades each day. You may not find enough buyers when you want to sell these stocks, and these are also often the penny stocks that are manipulated in pump and dump schemes.
Fortunately, you can avoid this by only investing in stocks that have a large trading volume of tens of thousands or hundreds of thousands of shares being traded each day.
Penny Stock Trading Hacks
Trading penny stocks isn’t exactly easy. It requires lots of diligent work and due research on your part. But if you are willing to put in the work and learn about behavioral finance, it can certainly turn out to be a lucrative money making opportunity for you.