Work less and make more, isn’t that the dream of any hardworking American? I see this for many of my current coworkers. They have spent 20+ years building a career, put in more than 50+ hours a week away at an office to finally bring home a nice sized paycheck.
It’s honorable to see the years of hard work finally pay off at an age where the kids are grown and retirement is in sight. But not every person wants that for themselves or for their careers. Many risk takers want a higher payout at an age where retirement is many years away, and that's where day trading Penny Stocks becomes an exciting option.
A Look Into Penny Stocks
For some people, they have found such luck in the stock market; specifically, in the use of day trading penny stocks. For those of you who are not familiar with that term, it’s any common stock that is valued at less than a dollar. Synonymous with the term ‘penny stock‘ are the words ‘speculative’ and ‘volatile.’ Buying penny stock can be seen as a gamble; a risk that can lead to you losing a lot more than just a few cents if not done carefully.
As with many things in life, it is important to remember these wise words, “No risk, no reward.” Understanding the risk when you day trade penny stocks and knowing if it is worth the end result is what’s important when dealing with something like how to day trade penny stocks.
I will lay out some important aspects of this stock market art that may help you become more successful (and richer) in the end.
MarketWatch columnist, Michael Sincere, shares some important insights on how to day trade penny stocks carefully, and other valuable knowledge to know before your trading quest starts.
The first financial point he recommends is to sell quickly. Many people seem to get caught up in the promise of high returns for selling their penny stocks. You should never get in the mindset of “just one more day” because things can nosedive quickly. A return of 20%-30% is a great range to aim to achieve. It is unlikely the stock will go much higher than that without significant risk on your part.
Secondly, Sincere recommends to treat penny stocks as “inmates at a prison that can’t be trusted.” They are not steady, and as I mentioned earlier, they are volatile. If you want to day trade them, then look specifically for the penny stocks that have annual highs and ones who have a proven record of steady growth.
Sincere says to be leery of success stories and ‘tips’ that are being offered. It’s pertinent to understand who often runs this game (scammers), and that they aren’t in it for the good. Watch out for the newsletters and emails that get sent your way too. These avenues never share tips that will lead you to make an educated move about your stock; they just give notoriety to companies that want to ‘plump up’ their stock value.
Keep A Clear Mind
Sincere also mentions some mental aspects that are important when working the stock market and making a profit with penny stocks day trading. These are the most important tips in my opinion, so please take note of them.
Don’t Fall In Love
The first one is to not fall in love with a certain type of stock. Do not show a loyalty to one, because it will not be loyal back to you. Penny stocks are a very risky item that you must tread lightly with. Falling in love with them is like falling in love with the bad guy/girl and expecting them to change because of you. It’s probably not going to happen and you will only end up burned in the end.
Know When to Stop
Finally, Sincere says to use mental stops. Weigh the risk-reward of the penny stock before making your final move. A risky part of this kind of trading is to know when to cut your losses and not get greedy. Try to take a step back and remember to keep yourself in check. It may hard to do, but you don’t want your loss to be more than you can gain back.
Trade with confidence. Sign up for Jason Bond's Day & Swing Trading Program, which keeps you to-the-minute updates of what to buy and sell, all the while helping you develop your own killer instincts on how to successfully day trade penny stocks.
As you can see, there are lucrative ways to be successful outside of the normal American Dream. Day trading penny stock is risky, it’s a game, but it can be done.
Be informed and do not let yourself get consumed by the greed or allure of the high return of the cheap stocks. It’s a tricky game, but for the right person it can lead to a very successful business venture.