3 Things Penny Stocks Traders Need to Know in 2022
If you’re looking to trade penny stocks in 2022, it can be challenging. But, with the right information by your side, trading penny stocks right now can be much easier than previously imagined. Now, there are a few ways to have the greatest chance of making money with small caps. This includes knowing how to trade, what is going on in the market, and what your investing goals are. While this may not seem like much, these three things can set you up for success.
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If you’re trading penny stocks right now or have been in the past few months, you’ve likely seen how volatile the stock market is. And as a result of that, it can be easy to either make money or lose it. So, knowing how to take advantage of these factors and what exactly is occurring, is paramount to profiting. Considering all of this, let’s take a look at three must knows for trading penny stocks in 2022.
3 Must Knows For Trading Penny Stocks in 2022
- What is Affecting Penny Stocks Right Now
- How to Benefit From Current Events
- How to Make Money Trading Penny Stocks
What is Affecting Penny Stocks Right Now
When it comes to making money with penny stocks, the biggest factor to consider is what is going on in the stock market right now. And because of this, let’s take a look at the largest impacting factors on penny stock prices in February 2022.
At the top of the list we have inflation and interest rates. This has remained a big deal as the massive stimulus given out during the pandemic, would inevitably lead to higher inflation. And now, the Fed anticipates raising rates as soon as March. This has caused fear and panic among investors and continues to be a major source of volatility in the market.
Next we have geopolitical tensions with Russia and Ukraine. While this is not a fiscal event, as a result of the U.S.’s tensions with Russia and its backing of Ukraine, it does have a major impact on how stocks are trading. On February 15th, news dropped that Russia had begun removing some troops from near the Ukrainian border. And, this caused the market to rise substantially. However, we are no where near out of the woods yet and this is an important event for investors to keep in mind.
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Lastly, we have the pandemic. If you’ve invested in penny stocks in the past year or two, you are likely used to the effects of Covid on the market. On the other hand, if you have not, it is quite clear. During that time, we’ve seen a major emphasis on biotech penny stocks, and certain other markets. But, we’ve also seen heightened volatility as new variants come out and metrics are reported. So, always keep this in mind as it has continued to have a large effect on how penny stocks trade.
How to Benefit From Current Events
When it comes to benefitting from certain current events, there are a few things that investors need to understand. For one, thinking outside of the box to how events may impact specific penny stocks or industries at large, is crucial. If we consider the pandemic, we saw that a massive decline in travel led to major drops in the demand for energy. This is one example, however, it can be applied to any event that is ongoing.
The main idea to keep in mind is cause and effect. And, understanding exactly how the events laid out above will impact penny stocks, is crucial. Now, to benefit from these, the best course of action is to make a well-thought-out penny stocks watchlist.
This means looking at every company you’re interested in, and putting in the time to do the proper research. With this, you’ll be able to feel confident that the stocks on your list are worth buying. So, with this in mind, always consider how current effects can lead to benefits in your portfolio.
How to Make Money Trading Penny Stocks
Now, making money with penny stocks can be one of the toughest parts of the process. But, there are two main strategies that investors utilize. On one hand, some go with a long term trading strategy. This is quite self explanatory and involves picking penny stocks that could have a long term benefit. Often these will be in industries like mining, precious metals, or other less volatile markets.
On the other hand, we have those who choose to buy more short-term focused penny stocks. This strategy involves day trading or swing trading and utilizes short-term moments to make small and medium sized gains. Swing trading is more characteristic with penny stocks as the volatility lends itself to this strategy. However, it can be more risky if traders are not experienced. Either way, having and utilizing a trading strategy will always be the best way to make money with penny stocks.
And while this is in no way a complete list of how to do that, it should help to point you in the right direction. In addition to this, knowing what your tolerance for risk is and your investing goals, will both help you in your search. So, with all of this in mind, making money with penny stocks can be much easier than previously imagined.
3 Penny Stocks to Watch in 2022
- Senseonics Holdings Inc. (NYSE: SENS)
- Exela Technologies (NASDAQ: XELA)
- Farmmi Inc. (NASDAQ: FAMI)
Are Penny Stocks Worth Buying Right Now?
If you’re looking for the best penny stocks to buy, there are hundreds of options to choose from. But, knowing exactly what you’re looking for and how to pick the best penny stocks to buy, will always be crucial in your search. So, always know what is going on in the stock market and use that as an advantage.
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Because the market is so volatile right now, this will continue to be paramount to profiting with small caps. In addition, having a trading strategy and using it thoroughly, will help to avoid losses due to volatility. So, with all of this in mind, do you think that penny stocks are worth buying in 2022 or not?
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