3 Tips for Trading Penny Stocks in December 2021
With December coming up just as fast as November went by, the time to flesh out your penny stocks trading strategy is now. As a result of so much movement with both penny stocks and blue chips, having a thorough understanding of both how you trade penny stocks and how to trade penny stocks in general, will be a great asset to your portfolio. Also, 2021 has not been a banner year for stability in any sense of the word, it has created a lot of opportunities to make money with penny stocks.
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This is the result of the massive speculation that comes with the under $5 territory. Because penny stocks are so speculative, investors tend to use world events and updates as a way to profit off of swift price action. So, staying up to date with all the latest news and announcements is crucial to investing in penny stocks. In addition, understanding
In addition to this, some investors tend to consider the long term with small caps. This means knowing what events are coming up in the next few months and how they may affect your portfolio. So, if you’re planning to invest in penny stocks in 2021, take a look at these three steps.
3 Things All Penny Stocks Traders Should Know Next Month
- Current Events Affecting Penny Stocks
- Making a Penny Stocks Watchlist
- How to Trade Penny Stocks
Current Events Affecting Penny Stocks
Right now, there is a lot to consider when it comes to investing in penny stocks. One of the main concerns with investors right now is inflation. Although it’s difficult to pinpoint one distinct reason or the major inflation we’re seeing in 2021, there are a few that can help explain it.
The most obvious cause is the Covid pandemic that has wreaked havoc on the U.S. economy over the past year and a half. As a result, billions in stimulus have been given out to individuals and small businesses alike. On top of this, we have the recent $1 Trillion Infrastructure Bill that just passed into law a few weeks ago. Because of these two factors, the price of common products has shot up tremendously.
This is, however, not only the fault of inflation. Rather, global shortages of microprocessors have resulted in goods such as tech devices and automobiles, rising substantially in value. So, while this may not seem great, we’ve also seen penny stocks involved in this such as EV penny stocks and tech penny stocks, rise substantially. So, as we see it is always important to consider cause and effect. And with penny stocks, this is one of the most important considerations to make.
Making a Penny Stocks Watchlist
One of the best ways to get ahead when it comes to investing in penny stocks is to make a penny stocks watchlist. Although this seems like an obvious step, it is often forgone by traders, who simply put money into whichever penny stocks are trending.
But, doing the research and understanding why certain stocks have the potential to rise, is key to making money with small caps. Before making a watchlist, investors need to first have a thorough understanding of their own trading style. This means knowing what your tolerance for risk is and how to use that as an advantage.
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Next, traders need to understand what their unique investing goals are. Are you looking for a long-term penny stocks investment? Or, are you looking to make short-term gains off of speculative moves? Either way, having a concrete understanding of how you trade will benefit you greatly in both the short and long term. Considering all of this, are you making a penny stocks watchlist right now?
How to Trade Penny Stocks
Learning how to trade penny stocks will always be one of the best steps to making money with small caps. And to break this down, we can look at two strategies based on time. On one hand, we have swing trading. This method is based on speculation and involves finding intraday patterns, and capitalizing on them.
Swing trading usually takes place on an hourly or daily basis and therefore, is a highly short-term trading technique. Most who trade penny stocks tend to utilize swing trading given how speculative and volatile small caps are. And as a result, it can be a winning strategy if used correctly.
On the other hand, we have long-term trading. This is fairly straightforward and involves finding penny stocks that are at low levels and holding for the foreseeable future. We’ve seen plenty of penny stocks rocket out of the $5 range in the past few years and it occurs regularly.
However, it is crucial to know everything you can about the company before investing. While one strategy is not better than another, it takes understanding your investing goals to know which one is right for you. In line with this, investors should consider what their short and long-term goals are and how that affects the penny stocks on their lists. With that in mind, which method are you trading penny stocks with?
5 Former Penny Stocks That Exploded
- Nio Inc. (NYSE: NIO)
- Blink Charging Co. (NASDAQ: BLNK)
- FuelCell Energy Inc. (NASDAQ: FCEL)
- Plug Power Inc. (NASDAQ: PLUG)
- Novavax Inc. (NASDAQ: NVAX)
Are Penny Stocks Worth It?
While it’s difficult to say with certainty whether penny stocks are worth it or not, there are plenty of opportunities to make money with small caps. However, knowing what movement is occurring, why it’s occurring, and how to take advantage of it, will be a major asset to your trading. Because there are hundreds of penny stocks to choose from, it is not always the easiest to pick the best ones for your watchlist.
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The best way to do so will always involve research and a thorough understanding of current market conditions. Considering that 2021 is almost over, investors should continue to look for trends that could be profitable. With all of this in mind, do you think that investing in penny stocks is worth it or not?
