Three Penny Stock Trading Tips

| September 5, 2014

market necessitiesAre you trading penny stocks?  Maybe you’re buying them daily or weekly?  Maybe you’re a longer term buy and hold type of investor.

Regardless of your investment style, playing in the penny shares market can be risky.

Penny stocks are the Wild West of investing.

And to protect yourself, you need to be extra cautious.  Since I’ve been in the financial markets for almost 20 years now, I want to share with you some of the secrets to making money with penny stocks

Now let’s be honest about one thing… it takes work.

You can’t just sit down and start trading penny stocks and become a millionaire in a day… NOPE.

You’ve got to do your research…

And that’s penny stock trading tip number one.

You’ve got to look at the company and determine its true potential.  Is it growing? Is it shrinking? Are they making sales? Is the company making MONEY?  Are profits growing or shrinking?  Are they about to release new products or change management?

Research is critical, and you need to do it BEFORE you buy a penny stock.  That way, if the stock moves against you, you’ll be able to know in a heartbeat if you should abandon ship or double down!

And that brings me to penny stock trading tip number two…

KNOW what you invest in.

Seriously… I’ve lost count of the number of investors I’ve met that have no idea about the companies they are investing in.  They got a hot stock tip from a brother or cousin, or some stupid email and they invested their hard earned money.

They know nothing about the company… and in the end, the result is always the same… lost MONEY.

Look, if you don’t know the first think about biotech drugs, the FDA approval system, and how the human body works, you should probably avoid investing in start-up biotech companies with risky drugs.

There’s no shame in that…

There’s no shame in admitting what you know and what you don’t know.

Go to your strengths… if you understand the retail industry (much easier to know versus biotech if you ask me), then invest in those companies.

If you pick the right ones, the profits can be just as big… and your downside is at least limited!

Now, for penny stock trading tip number three…

Get educated.

I’m a big believer of education.  It never ends.  I’ve been in the markets for 20 years and I’m still learning… there’s a famous quote that goes something like:

“When you stop learning you start dying”

I wish I could remember who said it… (if you know, shoot me an email, I want to give them credit).

Anyway, constantly educating yourself is critical.  You’ll learn something new and find new ways to profit.

So how do you learn? 

Well, that depends on you.

I’m an avid reader… can’t stand videos.  So I read everything I can about the markets.  I also love to talk to people… so when I meet someone who knows a lot about a particular topic, I ask a lot of questions.

Learning face to face is huge!

If you can, read the papers – the Wall Street Journal, Investors Business Daily, and the Financial Times are all great reads and you’ll learn tons!

More importantly – read what I write… I’ve got 20 years of experience and I want to share it with you!  So keep reading, and if you have friends who might find this kind of information useful, feel free to send it to them!

So those are three quick tips to better trading… stay tuned and I’ll give out more secrets to making bigger profits trading penny stocks.

Profitably Yours,

Penny Stock Research

Tags: , ,

Category: Investing in Penny Stocks, Penny Stock Tips

About the Author ()