Making Money With Penny Stocks
Posted by Jon on June 14th, 2011Lots of people ask how can one be making money with penny stocks. It’s extremely difficult to trade penny stocks for a living because they are like firecrackers ready to explode in your hand. And chances are that every penny stock trader gets burned quite a bit. Trading penny stocks require a huge fortitude and a steadfast discipline that, I’m sorry to say, most traders who attempt to trade don’t have.
That said, there are ways that you can be making money with penny stocks but they are far from easy. The trick is to never fall in love with the hype and the “glorious” results or expectations about the company you are trading. There is a reason why these stocks are priced at a fraction of a penny, and it’s not because they are going to be multi-billion dollar companies. But the story these stocks tell, whether via their management, PR firms or investors is one which can lead many novice traders to believe that they’ve stumbled on the new hot thing.
I’ll tell you this. Making money with penny stocks involves not falling in love with penny stocks. You need to ride the wave up and get off at the first sign of trouble, which is usually the breaking of support. Only the “hot” penny stocks should be traded on any given day. The others don’t get much movement and you may end up sitting with one in your portfolio for weeks on end before any movement happens.
Finding the “hot” penny stocks involves scanning through the % gainers and volume leaders on any given day. This will help you prune your trading list to a few stocks that you can keep an eye on and go from there. Always remember to exercise discipline when getting involved with this type of stock. The people who trade these and the companies that market them have only one goal: To separate you from your money.
Making money with penny stocks is not impossible but it certainly isn’t the get-rich-quick dream that many of these marketers try to sell the public.