When it comes to trading penny stocks, there’s not an infinite number of lessons to learn. The knowledge you need is finite.
But one thing you REALLY have to learn: patterns.
Like this pattern Tim Bohen discovered that happens at exactly 2 pm, several times a week…
Then there are trading rules…
There’s not an infinite number. It’s about having the discipline to follow them.
Don’t get me wrong — it’s not easy. For example, you need to learn to adapt to changing markets. But at some point, it will all make sense.
And it shouldn’t take the rest of your life to learn the most important trading rules.
That’s especially true of rule #1.
It’s a simple rule.
But for many traders, it’s difficult to follow.
I say “Cut losses quickly” so often that I might sound like a broken record.
That’s why, when a Trading Challenge student asked us about it during last week’s webinar, I made sure we all answered.
My hope is that by understanding why it’s so important…
The MOST important rule for me and ALL my top students…
It will finally sink in. Check it out…
Table of Contents
- 1 The #1 Penny Stock Trading Lesson EVERY Trader Should Know…
- 2 More Top Penny Stock Trading Lessons
The #1 Penny Stock Trading Lesson EVERY Trader Should Know…
Rule #1 is so important that I want you to know the pain we felt NOT following it. Let’s do this…
3 Top Traders Talk Rule #1: Cut Losses Quickly
Thanks to Trading Challenge student SuzyQ, who asked…
“Question for all three of you: Did you ever have trouble cutting losses quickly, and how did you overcome it?”
Penny Stock Trading Lesson 1: Matt Monaco’s Take On Rule #1
Matt’s experience reflects a lot of top traders. Here’s what he had to say…
“Eventually, you’re gonna take a loss that’s so bad that you’ll never want it to happen again. Pain is the best teacher.
“Back in 2020 … I think it was late February or early March when I took a big smack … it was something like a $6,000 loss. It put me back below PDT, and it was my low point.
“But it forced me to be disciplined. And by April, I had my first-ever five-figure month.”
I remember when Matt took that loss. The most important thing was getting himself back on trade and vowing to be more disciplined.
Penny Stock Trading Lesson 2: Bryce’s Near-Disaster Shorting a First Green Day
For Bryce, it wasn’t even taking the loss so much as experiencing that sickening feeling. He went from up big in a trade to nearly blowing up. Check it out…
“I never had an ego, but there was a time I tried shorting a first green day,” Bryce says. “At one point, I was up something like $100K unrealized. I kept adding and adding. All of a sudden, it started to squeeze. I found myself down $11,000.
“Again, I was shorting a first green day that was on the verge of a breakout. That scared me into respecting my trading plan.”
A good lesson and a bullet dodged. I wasn’t as lucky as Bryce…
Penny Stock Trading Lesson 3: Why Cutting Losses Quickly Is Rule #1
Matt was right about the pain of a big loss. And I’m sure he heard it from me at least 50 times…
If you have trouble cutting losses, eventually you’ll take a loss that’s SO bad you’ll never want to feel that way again.
For me, it was a $500K loss on Cygnus e-Transactions. It’s a long story…
It’s the least I can do to try to drive home the point. In the book, I wrote about the entire painful experience of being stuck in an illiquid penny stock.
For the purpose of this post, let’s just say that single trade made me want to teach people how this industry really works. It was painful, but it was my best teacher and changed my life for the better.
More Top Penny Stock Trading Lessons
Every week I give a Trading Challenge webinar. They alternate between Q&A sessions and live-trading webinars.
Over time, lessons from webinars compound to grow your knowledge account. Come with questions and work to get better at trading penny stocks under $1.
5 More Penny Stock Trading Lessons
- Why Bryce FORCED himself to trade his way over the PDT even though he had enough cash. (Shocking but true and SO important if you want lasting success.)
- Why YOU must make the decision to study. (Seriously, if I have to convince you to study, there’s not much hope.)
- Why it’s true that money changes you, but not in the ways you think.
- How the Tim Sykes NFT Club is designed to weed out undedicated traders. Not everyone agrees, but I’m sticking to my decision.
- PLUS: Why I have so many movie references — and what, exactly, it has to do with trading. (And the weird reason it has served me well…)
There were dozens more lessons during the all-day webinar. I can’t encourage you enough to show up every week with solid questions.
Ready to take your trading to the next level? To access the live webinars and hundreds of archived webinars…
Live webinars separate the Trading Challenge from our stand-alone products and newsletters. Every week there are two to four live webinars from mentors like Tim Lento, Mark Croock, Matt Monaco, and me.
Want more penny stock lessons from Trading Challenge webinars? Comment below, I love to hear from all my readers!