Penny Stock Trading Strategy - How to Manage Your Trading Money
By Matt P Morris
An essential element of a good penny stock trading strategy is a money management plan. For some people this occurs to them as common sense, but some people approach trading as a form of gambling and use little to no discipline when it comes to managing their trading capital.
2 Key Factors To Help You Succeed With Penny Stock Trading:
1. Divide your capital into 4 imaginary equal blocks. This is simple, if you start with $1,000 in your trading account, simply make a mental note to not put more than $250 into one stock/equity. If you start with an odd number, just divide it by 4 to get an idea of what a fourth of that amount is.
You can choose to divide up your capital into thirds, but I wouldn't go any further than that. If you start putting half of your account or more into any single penny stock, prepare to be disappointed when you see your small starting amount of trading capital turn into vending machine capital. Of course I am using a little humor here to illustrate my point.
2. Know when to cut losses. Many times you will not be able to use stop losses when trading pink sheet or otcbb stocks. So you will have to use what many traders refer to as "mental stop losses". Basically that just means that you will sell a certain stock if you are down a certain percentage amount or if it breaks a key support level on the chart.
You have to give your trades some room to breathe so to speak, but I usually like to cut my losses around 30% or so. May sound like a big loss and it is, but when your other trades are 50% to 200% winners it ends up working out. Trading micro cap stocks can be a successful venture, you just need to use some level headed judgment.
Written By Matt Morris, Editor of Microcapmillionaires.com the best penny stock newsletter you will find. I am one of the few penny-newsletter-guys that do not accept compensation to "pump" penny stocks. Sign up for 3 free hot penny stocks here.
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ReplyDeletePenny Stock Dream is not your usual penny stock picking website. We are a team of analysts and investors in the field of selecting penny stock picks. We have gotten used to seperating the ordinary from the extraordinary when it comes to the stock market, especially when it comes to researching and reviewing penny stocks trading on the OTC Market and Pink-Sheets exchanges.
ReplyDeletePenny Stock Dream is not your usual penny stock picking website. We are a team of analysts and investors in the field of selecting penny stock picks. We have gotten used to seperating the ordinary from the extraordinary when it comes to the stock market, especially when it comes to researching and reviewing penny stocks trading on the OTC Market and Pink-Sheets exchanges.
ReplyDeletePenny Stock Dream is not your usual penny stock picking website. We are a team of analysts and investors in the field of selecting penny stock picks. We have gotten used to seperating the ordinary from the extraordinary when it comes to the stock market, especially when it comes to researching and reviewing penny stocks trading on the OTC Market and Pink-Sheets exchanges.
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