Knowledge is Power!
Everybody wants to make money easily. Penny stocks trading bring you this opportunity. It is possible to make a nice profit on stocks that aren't on the main stock
exchange. Here the important thing is to locate the next big company and the
most active penny stocks. Many people have many ideas on stocks. One may get
confusing with these ideas, because, different people have different thoughts,
ideas, strategies and techniques. But there is a general principle for trading
stocks by following which you can find the best possible ones to invest in. So
you stand a better chance of making a good profit.
The following are some unbeaten rules for trading stocks.
· The most effective formula is make your own research
and the best medium is internet. It will help you have a good knowledge of the
stocks. If you search ‘best penny stocks' you will a list of websites promising
high returns. You may see their records and other information from those sites
by using a tool provided on the site. Keep researching and try to find those
stock recommendations which keep popping up over and over again. Look the
records from the last few days or weeks to see which ones have been performing
really well. A good, reliable source should be searched for getting Penny
Stocks picks. Otherwise it will result in huge loss and no profit.
· The investor should go for LIMIT orders! Putting
in a MARKET order with Penny Stocks is highly
risky. It is so because these types of Stocks can move really quickly,
sometimes in seconds, and it will leave you with empty handy before you even
get off the ground.
· Another important thing is you should decide a
stop-loss peak. It will help you to avoid great loss. For example if you buy
10,000 shares at $0.20 ($2000.00), you must put a stop loss at around $0.15 to
limit loss at $500. Here important is to cut your loss. You may not want to
have loss. But in this trade, losing money is certain. The trick is, to win, more
than you lose.
· Put in sell orders keeping in mind what's
acceptable for you. Always the principle should to but low and sell high. For
this you have to become accustomed to the way they trade. You must devise a trading
policy and proceed according to that. It can differ from person to person
depending on someone's risk tolerance. The most common trading formula is to put a
sell order above 20% profit where you purchased the stock, and a stop loss in
10% below where you purchased it. This is a very easy method, great for
beginners, and can help you get familiar with Trading Penny Stocks. As a result you can work out
what you’re more comfortable with, and adjust those numbers accordingly.