One of the most common emails we get here at DamnGoodPennyPicks.com are from people wondering about the do’s and don’ts of trading the best penny stocks. While alot can be said on the subject, we distilled our take on the matter into Four Rules which follow:
Penny Stocks: The Four Rules of Trading
1. Never Risk More Than You Can Afford To Lose
If you are trading penny stocks with money you need to pay your rent or buy milk for your kids or make you car payment, stop what you are doing and come back to penny stocks when you have extra cash that will not hurt you if you happen to lose it. People do make money trading penny stocks. But people also have trades go against them. Make sure the money you are using to trade cheap stocks isn’t money that is going to hurt you badly if you happen to lose it. Please.
2. Don’t Fall In Love With Any One Situation
So, you research a stock or get a hot tip and form an idea regarding a stock and…you stick to your opinion ONLY AS LONG AS IT’S PROFITABLE. If you’re proven wrong, get out and wait for the next opportunity. There are always stocks that are performing now. So if your “winner” turns out to be otherwise, don’t frown, don’t fret, don’t double up, just move on. If you have any profits in your stock than multiply this advice by 10. Your reason or opinion or where you think a “winner” is going means nothing. It’s the price of the stock here and now that matters. If it isn’t what you thought it would be, get out.
3. Stay Alert, Especially On Fast Moving Stocks
This may sound obvious but so many people rack up losses disregarding this rule. Watch what you are doing. Never try to fit trades into your schedule when a stock is on the move. If you know you have to be away from your computer for a long while, consider exiting your positions and diving back in when you can watch your screen. If you’re trading full time try not to schedule anything during market hours. Also, always recheck your orders to make sure you’ve entered them correctly. On some cheap stocks you’d be surprised how easy it is to add an extra zero. Once again, STAY ALERT. It’s your money you’re playing with.
4. You Can Never Go Poor Taking Your Profits
Sure, stocks run. Sometimes a lot more than where you thought they would go. So what? They also swing down too. If you’re comfortably ahead in a given situation consider selling and booking your profits. Even if they are small. Racking up lots of small profits in a row will eventually result in BIG gains. No one ever went poor taking profits.
And that’s about it.
At DamnGoodPennyPicks.com we have been trading penny stocks for a while and are always available to answer any of your questions. You can reach us via email at info@damngoodpennypicks.com or with our contact form on our website at http://www.damngoodpennypicks.com
All the best as you trade penny stocks,
Jeff Mirkin
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