How To Buy Penny Stocks
The biggest and most basic concept behind my teachings is how to buy penny stocks and yet, in spite of this fact, it’s one of the littlest-understood aspects of trading…people simply don’t take the time to watch this free penny stock trading guide or read this key penny stock trading book and it’s that lack of preparation that kills their chances at becoming my next self-sufficient student!
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Just today I revealed my latest millionairestudent who I interviewed in Miami just a few weeks ago and he’s worked his butt off studying and preparing and you’ll see that’s been his key to success:
On the one hand, buying penny stocks seems pretty simple: choose a stock, buy it, and then sell it. But within this process, things can get complicated. For instance, what makes one penny stock rise and another one fall? Here, I’ll discuss some of the most important basics about how to buy penny stocks.
Learn the basics of how penny stocks work. If you want to learn how to buy penny stocks, the first step is learning the basics of how penny stocks work and this other free penny stock guide helps bigtime. While I understand that you might be itching to get started, it’s vital to back up and spend some time on education.
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It’s been proven that the majority of new traders will fail. This isn’t because penny stocks are too hard to trade or because the system is too risky. It’s because new traders simply don’t take the time to learn the rules. They don’t understand how or why they are trading certain stocks. Without knowledge, trading penny stocks amounts to nothing more than random betting. It’s like playing a slot machine in a casino, and the odds are not in your favor. By seeking out a group like my Millionaire Challenge, you’ll be enrolling yourself in a program where you can learn how to trade penny stocks in a helpful and targeted environment.
Determine if penny stocks are for you. Listen, trading penny stocks is not for everyone. This type of trading can be profitable. Trading penny stocks is how I made my fortune, turning my $12,415 bar mitzvah money into nearly $5,000,000 over the years. However, trading penny stocks isn’t without its share of difficulties.
For instance, penny stocks can be extremely volatile and fast-moving. For new traders, it can be easy to become very overwhelmed by the rapid pace of penny stocks. Keeping up can prove so challenging that many decide to throw in the towel.
Additionally, while this volatility can mean that it is possible to make money rapidly, it also means that it’s possible to lose money rapidly. For many traders, this risk is too frightening. Actually, this inherent risk is what scares off lots of investors. This can be a good thing, because that basically leaves more room for investors like me (and you) to potentially profit. However, it’s not for everyone.
If, in your research about learning how to buy penny stocks the whole world seems like it’s not for you, then maybe you should take a different direction. There are many different ways to trade. They don’t all have to be for you, though it’s worth looking into a variety of styles…some of my students like short-selling penny stocks like this pattern, or many prefer dip-buying them like I do with this pattern…you choose what works best for you!
Learn to identify the best patterns. Once you’ve decided to get real about penny stocks, it’s time to really start learning about the art of how to buy penny stocks.
One of the things I stress to my students in the Tim Sykes Million Challenge team is that it’s all about patterns. Learning to identify patterns in penny stocks is one of the keys to making successful trades.
So, how do you begin to identify patterns? By obsessively reading charts, looking at the trajectory of stocks over time, and studying…and then practicing too!
In my teachings, I introduce my students to a lot of common patterns in penny stock trading. Now, it’s important to know that trading patterns are kind of like snowflakes–no two are exactly the same. But the more you learn, the more you’ll be able to identify similarities in patterns. Once you begin to notice similarities, you can make more confident trades and your risk will be mitigated because you will be applying some science and research to your investments.
Become a detective. Bet you didn’t know that you’d have to become a private eye to trade penny stocks. However, being able to do your due diligence is vital if you want to learn how to trade penny stocks.
One of the biggest allures of penny stocks is that there’s an easy entry for traders. Really, all you need is a brokerage account and a laptop, and conceivably you could be trading. However, this doesn’t mean that you should be trading just like that. Not only do you have to take the time to learn how penny stocks work, but you must do research on potential plays.
Penny stocks are not regulated as highly as the stocks on national exchanges. As such, it’s of the utmost importance to research the companies and stocks you’re considering buying. Never take press releases or stock tips at their word. You never know who stands to gain from such promotions, and penny stocks are fraught with pump and dump schemes. Don’t become a cautionary tale. Always put in the time and effort to get down to the bottom of the real story. It could save you money and heartache.
Paper trade. Paper trading can be a fantastic way to get your feet wet when you think you might be ready to buy penny stocks. It’s also sometimes referred to as “virtual trading”. Basically, paper trading means that you’ll get to simulate trades. This is a great way to test your prowess and to see if your pattern recognition and theories about trades are correct. It’s a low pressure way to begin testing yourself without putting actual money on the line.
There are plenty of platforms for paper trading online; I would use this one since it’s made for penny stock traders and try it out for a while. It can be extremely informative, and it can be a good indicator about whether or not you’re ready to start trading for real.
Start small and go slow. Are you ready to make your first trade? When you’re ready to start trading, do yourself a favor and start slow. Don’t start out with huge positions in your trades. Allow yourself to build confidence over time by making small trades at first. Rather than focusing on the dollar amounts, focus on small gains and learning from each trade. While this might not be as thrilling as throwing all your money on the table, it’s a far more stable way of approaching trading, and it will likely lead you to a longer and more steady career as a trader.
Let failure be your teacher. Particularly as a new trader, you’ll probably make some mistakes. You’ll win some, and you’ll definitely lose some. But rather than lament this or thinking that you’re failing as a trader, make a decision to learn from your errors.
This is part of why I suggest starting small. This will minimize your losses, and allow you the freedom to really evaluate what went wrong during a trade. It’s easier to do this when you haven’t lost a lot of money. By taking the time to evaluate your mistakes when they are still relatively small, you’ll be able to become a stronger trader. This means that as your trades become bigger and your position increases, you’ll be less likely to make the same errors.
Set specific goals. If you want to learn how to buy penny stocks and to gain success as a trader, setting goals is a vital part of the process. Goals act as your motivation to learn and keep getting better.
In this post, I detail the importance of setting specific goals and how the principles of Goal Setting Theory can play into your trading psychology. Basically, the more specific your goals are, the more powerful they are in terms of keeping you motivated and performing at your best. Don’t underestimate the power of goals in terms of helping you forge a successful career as a trader!
Find a mentor. Having a mentor can be immensely helpful in your trading career. Because he or she is further along the line in their career, they have already learned how to buy penny stocks, and a whole lot more. By meeting with and learning from a mentor, you can absorb all sorts of knowledge about what to do–and what not to do–as a trader.
I didn’t have a mentor early on in my career, but I wish I had. Today, I act as teacher and mentor to mystudents so that I can provide them with the guidance I never had. Why miss out on these important lessons and tips from someone who’s been through it all?
Rinse and repeat. These tips aren’t a simple to-do list that you can follow and then consider yourself a great trader. For the best results, you’ll have to revisit several of these steps over and over at various points in your trading career.
For instance, while you may master the basics of penny stocks pretty quickly, it’s important to go back and revisit your studies every now and again to brush back up on the basics. And continued studying of patterns and research are habits that you should adopt early on and maintain throughout your career as a trader.
Trading rewards routine, so be sure to dedicate yourself to the process wholeheartedly!
In conclusion, learning how to buy penny socks is no small thing. There are many considerations to take into account. However, by taking the time to educate yourself, create a support network, and establish good habits, you’ll be setting a strong foundation for your future as a penny stock trader. See for yourself how incorporating these tips can help improve your career!
Let me know if you like this blog post with all these basics listed…I think it’s helpful, but you tell me in the comments below!