Like the Harvard business school story, only 10% of penny stock traders make money and the remaining 90% don’t. If you want to join the group of traders that have been making money successfully year after year, then you have to sit up and read the following tips.
1. Have a plan and stick to it.
Great traders do a lot of research, test different trading styles and finally settle with the strategy that fits their profile. They have a well documented plan and they stick to it. They prepare well before the market opens. A plan will help you to avoid becoming an emotional trader. Every single trade is planned. They decide before hand the quantity, the price they are willing to pay, their exit profit target, their stop loss etc before entering into a trade.
2. Avoid distraction
We live in an era of information overload. It is so easy to get carried away by the latest trends. Learn to focus on what is important to your penny stock trading strategy. Keep sight of the broader trends. Great traders don’t let news about the latest trending stock derail their plan for the day’s trading.
3. Learn and keep learning
Most people that go into penny stock trading see it as a get rich quick method. This mentality will make you fail in penny stock trading. Practice makes perfect. You have to serve your time in the stock trading school of screen time and experience before you can become a wealthy trader. Great traders use continuous learning and adaptation to constantly stay ahead and create new and ingenious methods to profit from market changes. Penny stock trading is like becoming a great artist, it requires focus and time to develop the skills that makes you great.
4. Know yourself and leverage on your strengths
As you continue to grow as a penny stock trader you will come to realize your unique set of skills and expertise. Use your best skills in investing and protect yourself from your weaknesses by getting help from other people when necessary. Understand that individuals, for example, have far fewer resources when it comes to stock selection than large institutions. For example, you can’t compete with the big corporations when it comes to research but you can have more flexibility because you are not bogged down by bureaucracy.
5. Know the tools of the trade
Great penny stock traders have a mastery of trade tools charts, news feeds etc. They know all the features on the charts and how to quickly extract relevant information for a particular trade. These tools are a very vital part of a trader’s work. The more you master your tools the better you will be at executing trading strategies.
6. You can be wrong
Access to extensive trade tools does not exclude the human factor of error. Your analysis might go totally wrong at times. Great investors recognize mistakes quickly. Remain objective and write down the reasons for buying a penny stocks. When things start to go wrong you can check the list and know where you were wrong. This will rapidly accelerate your learning curve. Not all investment decisions will work out as planned. Recognize when to get out and move on.
By: James Morre
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