Penny Stock trading comes with the excitement of instant wealth and massive profits. But on the other hand you need rules in place to protect your trades and your income or it can just be a deadly habit.
Like trading without a plan
Most traders attempt to do this. They hear something, a rumour perhaps, or they think some big market moving event is about to happen and they just know which way it will move.
Which could be fine if you’ve a plan, if not it may not be a reasonable course of action. It will just be like gamblers on a lucky or unlucky streak, emotions begin to take over and dictate trades.
Therefore you’ll need a method of how and where you’re going to enter the market by evaluating.
– How much risk to take on each trade
– What percentage of account equity to risk per trade
– An exit plans for when a trade goes wrong or goes right.
– How long to give a trade to start working before pulling the plug on it
Remember it’s nothing personal it’s just business
In other words never fall in love with a stock and be that trader who takes a huge loss on a stock they couldn’t bear to part with. Keep your relationship with your stocks on a strictly professional level.
Also avoid making choices on a whim
Learn the game through an educational process. Don’t just scam your way through or feel your way forward by reacting emotionally to the last sound bite or price chart. Fear of missing the move takes absolute control in this scenario, sucking the trader into exposure at the worst possible times, when everyone else has already taken their money and gone home.