So, you already have stocks in your portfolio. The next step is to learn how to trade penny stocks for huge profits. Lets get started with the following rules of profitable penny stock investing:
Don’t Invest Your Life Savings
Trading stocks especially of the penny variety is a highly speculative venture at best. In fact, the volatility of these stocks can swing wildly from 400 percent gains to 50 percent loss within a day. As such, you must only invest money in penny stocks that you can afford to lose. If you want to be bold with your money, then these investments are the not right for you – stable blue chip stocks are. Only when you have gained the right experience should you risk investing more money through these riskier speculations.
Plan an Entry and Exit Strategy
There is a saying in the stock market: Bulls make money and bears make the money … pigs get slaughtered. In other words, you can make money if you control your greed. The best way to do this is to follow a well-planned entry and exit strategy for each of your trades. You can have different entry and exit strategies for the penny stock categories. Just remember to stick to said strategies instead of letting your emotions of greed, your hot tips, and your alleged insider information make the decisions for you. Again and again, let your head with its bank of reliable information rule your decisions.
For example, if you decide that you will sell the penny stocks once it reaches a 50 percent profit margin, sell it as soon as it reaches that point. Or if you set a target of $100 profit for the day, walk away as soon as that target is reached. This also goes for losses. If you set a loss limit of $100, pack your bags and leave when your losses reach that point. Otherwise, you will be setting yourself up for more disappointments when you try to recoup the initial losses. You can learn many things about yourself in particular and about stock trading in general when you realize the importance of this tip in how to trade penny stocks for huge profits.
Utilize Stock Filters
Sometimes, the hassles of tracking and making computations for many penny stock categories can get the best of any stock trader. Fortunately, here are stock filters or stock screeners to assist with the job. You will have the opportunity to filter through thousands of penny stock investment opportunities, which will allow for an initial list of hot penny stock list. Just keep in mind that stock filters are only tools to make good decisions and, hence, must never be used as the be-all and end-all of how to trade penny stocks for huge profits.
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