If you like the prospect of being able to see a possible 500% return in just a few hours or are skeptical about losing as much in as little time, take a look at some of these ideas that can help you be more successful.
Keep Track of your holdings.
One of the worst mistakes that people make when investing in penny stocks is that they will buy the company and then forget that they own it. This could prove to be an extremely costly and unnecessary error for investors. This is a major rule that applies to both blue chips and penny stocks alike. Because of the volatility of penny stocks it is even more important. The chances of your Dell shares spiking 200% in a day and then dropping back to even are pretty slim but because penny stocks can thinly traded, this is an every day occurrence. These are opportunities that you do not want to miss. Put together a penny stock list of your holdings and track them daily.
Don’t invest more than you can lose.
When you see hot penny stocks that is starting to move, it can be hard to keep from taking a 2nd mortgage on your house so you can buy as many shares as possible. Getting in over your head while investing in penny stocks is like fighting a losing battle. You are almost guaranteeing yourself a loss. When penny stock investors own a position that gets cut in half, they will often double their holdings to try and make back their losses. 9 times out of 10 this is an awful mistake. Take a look at why the position is down. It will take a lot of news to retrace a 50% loss. Even though penny stocks can show you some serious profits, they are volatile and have the potential to go the other way just as fast as they spike up.
Listen to the Angel….. Not the Devil.
So you just bought a hot penny stock that jumped 500% in two days. Why not hold it until it hits 1000% right? WRONG!!! Once investors have made a huge profit, they often look to realize the gains. If have a position in an illiquid penny stock that has just made a move, chances are it is going to come right back down when people start to take profits. Set certain entry and exit points on your holdings. Remember that those gains are not realized until you pull the trigger and sell the holdings. Don’t get caught holding the bag.
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