Investing In Penny Stocks? Here Is The Right Way
Investor and trades these are two types of people exists in stock market
. Investors or traders both look for opportunities to make money in market. There are different strategies for both.Investors are those whose investment time frame is longer and trades are those who invest or trades for short term. One should recognize themselves whether they are investors or traders, as it helps to select proper investing or trading plan.
Analysis or research is very important when you invest or trade. Fundamental analysis is helpful for those who are investors and look for long term gains and other hand those who look for short term gains should opt technical analysis.
Also there are many types of stocks available in the market such as penny stocks. These are though very risky but if you trade penny stocks with sound knowledge of technical analysis you can make big money in less money.
Making money with penny stock is not difficult, all you need to find a penny stock company that has good prospects in near future. Also you should have a trading strategy that has good success rate. Technical analysis is good for short terms trading so make your trading strategy based on it.
To find profitable short term trading opportunity you need to learn the skills of technical analysis as it is essential tool for short term trader. Make a simple trading plan that has good success rate and test it by doing paper trading initially.
Any trading system that gives you 70% to 80 % success rate consistently is good trading system. Do not waste your time to find trading system with 100% success rate all the time; there is no such system exists. With good success rate and using other methods such as stop loss and money management will improve your trading performance and hence the profit.
If you can make a simple trading system, having good success rate say 70% success rate and use it with other trading techniques such as money management and stop loss you can make big profit in any market or stock. Even in penny stocks.
People often like penny stock investing as it offers very big percentage gain as compare to other stocks. Here is example. SAY XYZ stock trading at $5 (Five dollars) and it rises to $6 (Six Dollars). The gain is $1 i.e. 20 per cent. That is good gin but say you find a penny stock with good future prospects and trading at $0.10 (Ten Cents) rises same as previous one i.e. $1 i.e. To $1.10. Your gain is same one dollar but in percentage your gain is 900% yes Nine Hundred Per Cent!
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