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Make Money with Penny Stock Investing

By Edited Nov 13, 2013 0 0

Everyone is looking for a way to make money in the difficult economy that we currently find ourselves in. Penny stock investing just might be something to consider. Maybe you are asking yourself why you would consider penny stock trading if many people suggest that it is a dangerous form of stock trading. Well you need to keep in mind that every form of investing has its risks. If you are looking for risk free investing then the stock market is not for you and the penny stock market is definitely not for you.

Penny stock investing is such a great potential money maker because penny stocks can make huge percentage swings on a regular basis. It is not uncommon for a penny stock to have a swing of 10%, 20% or even 50% in a given day. Now obviously, every penny stock does not do this everyday, however, it is a fairly common occurrence. This happens because of two factors: volatility and low price. Low priced stocks are low priced for a reason. There is not a lot of positive news coming out of the company that relates to its fundamentals. Since this is true whenever good news does come out the penny stock will often make great gains in price.

Now I don't want you to think that you can just mosey in and buy just any penny stock and succeed. There is a thought process that must go into your trading. In other words, you need a trading plan. Below you will find a few pointers on elements that must be included in your trading plan.

Good volume. Trade penny stocks with good volume. This will save you a lot of headaches. Low volume stocks are very difficult to get into and out of when trading. If you buy in lots of 1000 or more shares at a time it is difficult to get out of your position if the stock you are trading only trades an average of 15,000 shares per day.

Stay away from stocks that trade under 5o cents. Please be a realist. Most of the penny stocks that I trade are north of a dollar. I am not comfortable trading very low priced stocks. The odds are not good although the moves can be large. Never trade anything that is trading less than a penny. Those stocks are only a conduit for you to lose money. A penny stock is actually any stock that is trading at less than $5. You will be better off if you trade stocks between the $1 and $5 dollar value.

Use technical analysis. As I mentioned before, penny stocks are low priced for a reason. There really are no fundamentals to speak of. Therefore, it is best to look for technical analysis triggers to enter and exit the stock.

Have defined entry and exit parameters in place. You will lose money if you buy stocks based on hunches. Know exactly why you are getting into a stock. What indicator will you use? Will it be a moving average, a MACD divergence, or something else? Also know what will cause you to exit your trade. You need to know this before ever entering the trade. Stick to these entry and exit parameters like glue. This is your lifeblood in penny stock trading. If you can be disciplined here you will make money. If you cannot you will lose money.

Conquer the emotions of fear and greed. Fear and greed cause traders to do stupid things. It will cause them to abandon their trading program. Fear and greed will cost you money. You need to trade your account as if you have no emotional attachment to it. When you are able to do this you will find greater levels of success. If you cannot remove emotions from your trading decisions it will cost you.

If you can incorporate the previous elements into your penny stock trading program then you will find that penny stock investing is something that can return handsome profits for you.



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