Thursday, April 02, 2009

10 Hot Tips For New Penny Stock Traders

Are you new to trading penny stocks? Not to worry; after you read the following recommendations you'll have a huge foundation to build on!

Get A Quality Brokerage

It's important to locate a quality discount brokerage house with low commissions for your penny stock trading especially if you trade smaller blocks of stock, commissions can be costly. I use and recommend Sogotrade - only 3 dollars a trade.

Throw Away The High Expectations

Don't have high expectations - you're a beginner so don't expect huge % gains to come quickly and right off the bat. If you have high expectations when you start down here in pennystock land you're just affecting yourself and you're trading negatively. With high expectations comes pressure to perform, and as a penny stock trader you don't need to deal with unneeded pressure.

Start Small

You should start trading with small positions. As a newbie, don't put all your eggs into one basket. Spread you money around in different stocks so you're cutting your risk especially in your beginning stages. As you grow more comfortable trading penny stocks you can increase position size in a specific stock to the point where you're trading two, three, maybe even one stock (I wouldn't recommend this) with your whole account.

Do Your Own Homework

Don't buy a penny stock just because it's was posted on a message board or in a chat room. Do your own research and due diligence - I promise you'll trade better because you're comfortable with your own decisions plus it's more gratifying to profit from a stock that you uncovered and researched yourself.

Get a Mentor

Find a mentor or educator and follow his site. I remember when I first started I was always just trying to find inspiration and to know that I can succeed and profit from trading penny stocks. So it's very important and I'm sure you think the same, to find a website/mentor that can give you inspiration and education.

Don't Be Greedy

This tip builds off tip #2 - don't be greedy! I can't tell you how bad traders mess up when they just want more and more. What usually happens is that end up earning less profit or watch a profit turn to a loss.

Don't Get Over Confident

Don't get over confident, if you've made a great winning trade congratulate yourself (cause you deserve it) and move on to the next stock. Don't feel like you're invincible, because well, you aren't. You're just as much likely to loose all you gained in that winning trade in your next trade if you trade with a cocky attitude. Trade intelligently!

Trade Instead Of Invest

So you are thinking you want to invest in a penny stock at $.01 and sell when it goes to $1.00? It's rarely the case that a penny stock can make you a lot of money if you invest with it long term. Very few of these penny stocks are actually legit companies therefore most will never go up in the long-term. What most penny stock traders do is trade the hottest, volatile, volume-heavy penny stocks each day holding them for the short-term.

Short Selling

You can make money when penny stocks go down, too! It's called short selling and while it's not exactly for a newbie, if you're up for it you should definitely try it out. If you think a penny stock is going to go down, you short it, and make money when it goes down. It's that simple. Get my FREE ebook at to learn how to do it.

Stay Tuned

Keep up to date with my site for daily hot penny stocks to watch & make sure to follow every tip to insure your success in penny stock trading.

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