Life is not only about becoming my next millionairestudent, there are a ton of penny stock trading benefits.
While a lot of investors love to hate on penny stocks, and on the surface, it’s not hard to see why since the stocks themselves trade for infinitesimal amounts of money and the market is not highly regulated, and can be volatile…I am here to tell you that penny stocks should not be ignored or underestimated. While they trade for small amounts per share, penny stocks can reap you big rewards when you learn the right trading techniques, which I teach my students in the Tim Sykes Millionaire Challenge. Below, I will detail just a few of the many benefits of trading penny stocks that you may not have considered.
1. You get a lot for a little. Penny stocks are cheap. Some literally are pennies per share. Not all of them are dirt cheap, though. According to the SEC (The Securities and Exchange Commission), a penny stock is any stock that sells for less than $5 per share. While this means that they are not all literally being traded for pennies, what is consistent with these so-called penny stocks is that they are available at a very low rate. This means that you can buy a lot of shares of a stock for a relatively low amount.
2. Penny stocks are more accessible to stock market newbies. As previously noted, penny stocks are inexpensive and rather simple to learn compared to more complex higher-priced stocks. This makes them accessible to even brand new traders, even if they are working from a relatively small account. Many people have the idea that to be a player in the stock market, you need to start with a lot of money. Money does help, but penny stocks allow you to build a position in the market starting with a low initial investment and low knowledge base too…reading my free penny stock guide here helps a ton!
3. A very high potential return. Often, penny stocks are considered in a “growth” stage, which means that when you buy them, the price still hasn’t hit its high. This is ideal for a penny stock trader; it means that their relatively small investment could potentially offer a very big return if they time things out right. It’s possible to get double, triple, or even more back on your investment…success is NOT only about becoming my next millionaire This hot penny stock trader isn’t a millionaire yet, but he has made 100x on his $4,000 starting point in 2017 with now over $500,000 in profits…think he’s happy? (HE IS VERY HAPPY!)student, I have many students who begin with just $2,000 or $5,000 and they make $25,000 to $100,000 on their money and they’re VERY happy with that too!
4. You can learn “the system”. Some of the complaints that naysayers will cite about penny stocks is that they are volatile, and that it is possible to lose a lot of money quickly. These are valid concerns. It is possible to lose a lot of money trading penny stocks. However, if you learn how penny stocks work and flow my rules like these, this is far less likely to happen. You can learn the basics about trading penny stocks via my free e-guide to penny stocking; I go into a lot more detail with my students in the Tim Sykes Million Challenge Team.
5. Patterns do exist. While the world of penny stocks might seem like the wild west to the uninitiated, there are patterns to be found. It’s a matter of identifying, learning, and mastering them. Identifying common patterns can provide you with a template, giving you reliable methods for making good returns on your investments. By identifying patterns, you can begin to profit consistently from your penny stock investments.
6. Increased risk tolerance. Trading penny stocks has a reputation for being risky, and with good reason. The prices can rise and fall swiftly, due to market demand, “pump and dump” schemes, and goings-on within the companies in question. However, once you get used to trading penny stocks, you may find that your overall tolerance for risk goes up quite a bit. You never want to be foolish or disregard risk, but gaining more comfort with it can help you not just as a trader, but in any sort of business.
7. You won’t get bored. One thing that penny stocks are definitely not? Boring. With the quick pace and high turnover of these stocks, you’ll absolutely be on your feet at all times. If you’re not making a trade you’re researching one or figuring out when to sell. The quick pace of penny stocks isn’t for everyone, and can take time to get used to. I work carefully with my millionaire students to bring them up to speed so that they can be nimble, knowledgable traders who can calmly deal with the stress that goes with penny stock trading.
8. A great way to diversify your portfolio. Penny stocks are generally short term investments. This isn’t the sort of thing where you put your money in an account and forget about it. Many people were taught that stocks are meant to be long term investments. This is not the case with penny stocks, but that actually acts to your advantage. Because as any investor knows, it’s important to have a diverse portfolio–the idea of not putting all your eggs in one basket. Penny stocks allow you to increase liquidity and add diversity to your portfolio, which can actually make it stronger overall.
9. Lack of regulation. Penny stocks aren’t regulated in the same way by the SEC as are stocks that are listed on the major exchanges. One key way is that these companies aren’t required to supply the same information that companies on such exchanges would be required to provide. While on the one level this is a scary thing, if you’re willing to do the research on these companies yourself, then you can in essence remove a lot of these road blocks. Many aren’t willing to do that; as such, they’re not going to profit from penny stocks. By being willing to do what others aren’t, you can reap huge financial rewards.
10. A high level of risk. Penny stocks come with a fairly high level of risk. This might not sound like a selling point to feature in a blog post which touts the advantages of penny stocks, but stay with me. Because of the high risk involved with trading penny stocks, plenty of people are scared off from trading them at all. Moreover, I see this as a good thing. For one thing, it means less competition for those who do choose to trade penny stocks. Second, it means that there are more profits available for those who go for it…and by trading scared on EVERY trade, that makes me not scared to trade (knowing I’ll cut my losses quickly if and when a trade goes against me allows me to trade more often knowing I’ll be safe if I follow my rules!)
Penny stocks are not necessarily for the feint of heart. However, in reading this post, I hope that you’ve come to see some of the many benefits and advantages to trading penny stocks. For those who are ready for the challenge, penny stocks can prove a very lucrative prospect.
Are you going to take advantage of these penny stock trading benefits? Leave a comment if you promise to be a DEDICATED student, trade these stocks safely and not gamble on penny stocks like too many people do!