A very basic question often asked by curious minds is “are penny stocks able to make you rich?“ A concluding answer, in short, is YES. But how?
Warren Buffet was once asked, what would he do if he did not have billions of capital. He responded that he would invest in penny stocks if he was ever left with thousands or a few million because small companies are the inefficient part of the stock market. He was even confident of receiving more than 59% profit over the year with it.
Though currently, he is a billionaire, he started with small investments. He knew the profit tricks which made him the savvy investor he is today.
Although not everyone has a stroke of luck as that of Buffet’s, of course, one can make money with penny stocks.
Reality of Penny Stock Trading Results
Although there are positive results the sad reality is that most people fail. The reason being: penny stocks demand a consistent understanding of the company, continuous monitoring of the specific stock, and a good idea of a company’s operations for the last 3-6 months. But most often people are not patient and cut the diligence phase short. This ultimately leads to failure.
For making money with penny stocks, one needs to have
- Some good training strategies
- One of the best penny stock brokers (preferably an online broker)
- Patience with everything they trade
- Acceptance of the loss and/or cutting losses early on
The poor reality is that those seeking to trade penny stocks have don’t take the time to be mindful of the aforementioned factors. Hence they lose money.
Qualities of a Good Penny Stock Trader
Learning penny stock trading is not something that is overly complicated; it just takes time and understanding. It is very simple and easy to understand. One just needs to be extremely focused and serious in this regard.
Just follow some basic and uncomplicated rules to trading penny stocks. Consider it like a “penny stocks 101” intro course:
Patience Pays The Bills
You need to stick to your plan and be disciplined. Don’t rush into buying a random penny stock that you didn’t plan to buy. Wait for the one that suits your requirements the best. Even in this case, where you find no such suitable opportunity then it’s ok to wait. There will always be “another trade” and “another big breakout” stock. Staying away from trading is better than losing your hard-earned money.
Know Why It Is Happening
One quality of a good stock trader is knowledge regarding what drives penny stocks higher or lower. You must be aware of why the price of a share is falling or rising. Do the research and tracking to know all about it.
It will take you some time, as a good trader, to go with the flow of profit. You must know when you should give and when to hold on. Don’t hold just because you fear losing money or you think the stock will recover if it’s crystal clear that it’s wrong. Sometimes it’s better to take a small loss with the hope that you can catch the next wave than getting stuck and losing more money WHILE you hope for a rebound.
So, the conclusion is, you can make money with penny stocks as it is a proven fact and not a philosophy or hypothetical situation. Just maintain your hard work and dedication along with the ability to accept losses. With all this, you should be ready to put together a trading strategy and begin testing it with paper trading strategies. As a new penny stock trader, it’s better to lose “fake money” while you learn. This is one of the best ways to learn how to buy penny stocks when you’re just getting started.