Penny stock trading has changed in many ways. In the past, it was carried out from a desk in a cubicle farm or from a home office. Now, however, the supercomputers we call smartphones have the ability to trade penny stocks in real-time, and the results have been amazing. Even teenagers are getting involved and making massive amounts of money. If you’re searching for a way to make a minimal investment now that can turn into a large financial reward later in life, penny stock trading could be the answer.
You Don’t Need a Lot of Money to Start
Image via Flickr by slgckgc
You will need a large amount of money if you’re wanting to trade in high-dollar stocks, like tens of thousands. When it comes to penny stocks, though, you can literally trade full stocks for only a few dollars.
It’s up to you as to how much you start off investing, but a small amount of $500 is a great amount to begin with. A quick online search will review story after story of traders who started with $2,200 or less and turned their investments into sizable profits. Tim Grittani, for example, started off with $1,500 and turned his investment into $2.5 million.
You Don’t Have to Be a Trading Guru
You don’t have to be a trading guru to turn your penny stock investments into a sizable profit. However, here’s the truth about penny stock trading — there are many ways to partake, including:
- Buying pumps
- Shorting pumps
- Trading on NASDAQ
- Buying into earnings
- Buying contract winners
You may feel overwhelmed at first, but don’t get discouraged. Successful penny stock trading is based on being able to pinpoint patterns. Some people have a preference for shorting penny stocks, while others find it more suitable to play price action. These are two different approaches, yet each has its own pattern. Most people can identify patterns in one method better than in the others. Once you find your sweet spot, though, you’ll love trading penny stocks.
Always Read the Disclaimers
Staying up to date on the latest stock news through email updates is essential to penny stock trading, but you must be careful and take into account the source of the information you are receiving.
Go to the bottom of the email updates you receive and check out their disclaimers. The SEC requires stock trading newsletters to give a full disclosure if a particular stock is being pitched because the author is getting paid to give it exposure. If so, this is a clear indicator to disregard the information. These authors are getting paid to pump up the stocks. Instead of listening to them, make sure you’re listening to advice from a trainer who has your best interest at heart.
Know When to Sell
Once you hit a return of 20 to 30 percent, this means it’s time to sell the stock. Don’t get greedy and try to achieve a 500 percent or 1,000 percent return; this rarely ever happens. A 20 to 30 percent return is a nice profit to put back into your pocket.
Penny stock trading can be fun. It can also be extremely lucrative. By investing in penny stocks today, you can earn financial rewards later in life, but you have to be smart about it.
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