subject: A Newcomers Guide To Penny Stock Trading Concepts [print this page] It is possible to begin your penny stock trading adventure with a relatively small initial investment and this is something that makes it a very tempting prospect for some people . It can be very tempting to try and make a lot of money in too short a timeframe can be the downfall of the inexperienced investor. The desire to hit it lucky with their first few investments seem to take them over and they end up making bad choices that end up hurting them in the long run
But with the right advice from the get-go you will be setting yourself up for some success
Basic penny stock concepts
The terms going long and going short describe two types of strategies great penny stock traders observe and they are described below now.
Going Long
The idea of going long describes investors who buy a stock and retain it in their portfolio for as long as they can under the premise that the stock market always increases in value over time.
Because it is impossible to guarantee the success of every single individual company a lot of newcomers can get caught out when they assume that anything they purchase will definitely rise in line with the market . Investors will at some point lose money since it is a fact that companies go out of business and it is unrealistic to expect otherwise .
It can be quite nerve racking for traders who choose to go long, watching the value of their investments rise and fall in the short to medium term . The key is to stay strong during the down times knowing that ultimately the stock will rise once again with enough patience (and of course luck, that the company stays in business) .
Going long is somewhat of a safer option than going short, which we will discuss next .
Going Short
Penny stocks are known for volatility but for the highly savvy and skilled penny stock trader this volatility can be used to an advantage .
Short term investments have the potential to have huge returns when played right . Believe it or not, it is not unheard of that an investor will buy and sell the same shares a number of times in the same day to turn a profit . But to ride this train penny stock traders need to be willing to take the associated risk because things can go bad very very quickly .
However if you can find some awesome penny stocks to buy up at bargain basement prices and you have the experience and acumen to know exactly when and how to sell them on you will be on to a winner .
Unless you are the sort of person who must learn only by your own mistakes, there are a number of learning resources available, from mentors to online courses and more. This kind of training can give you a good enough background to have some success with your early trades . Knowing when a stock is about to make a strong move is one of the essential skills that you will need as a penny stock investor .
by: Gary Sterling
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