While many day traders will say penny stocks only trade on the Over The Counter or OTC exchange, that isn’t 100% true. Like most things, all stocks (regardless of penny stocks or blue-chips) trade on different exchanges.
Penny stocks beginners guide how to#
No matter your definition, if you understand how to actually traded penny stocks and make money, you’re doing good. Ask some day traders and they’re more likely to tell you that penny stocks are equities trading below $1. According to the Securities and Exchange Commission, penny stocks are equities that trade below $5. So if you’ve made it this far, then you understand that trader education is one of the most important things you can invest in right now.Īs far as what a penny stock is, there are multiple definitions depending on who you ask. While the penny stock definition is important, it isn’t as important as saving someone from jumping right into trading penny stocks. I’m here to tell you that the important things come first. Right now you may be a bit confused as to why we would start with something other than the definition of penny stocks. Learn to Trade Penny Stocks What Are Penny Stocks?
And if all you know is “I either make money or lose it all,” you may be better off going to the casino and playing slots. With penny stocks come a lot of risks and if you don’t know how to manage your trade, it will be difficult to deal with trades that don’t end up working out. Getting your account completely wiped out is a tough pill to swallow. If you got all-in every time, there’s a higher likelihood of going “all-out”. An educated trader not only can make winning trades but they also understand how to avoid or mitigate losses. My point is this, learn how to trade before jumping in. Not only is loss a very real thing, if you get lucky a few times, it almost trains you to think you’re good at trading, when, in fact, but you may also have just gotten lucky. It’s like playing baseball and thinking you will hit a home run every time. The “10x mentality” isn’t something that’s easily duplicatable. “I’m ok losing $100 in exchange for possibly making $1,000” but it isn’t that easy either. A good rule of thumb is to only risk what you can afford to lose.īut with penny stocks, because the upside can be so big, this leads to some people treating low priced stocks like a lottery ticket. This can make for a dangerous situation teaching or rather “training” a newbie to think of penny stocks like a lottery ticket.
You can scoop up thousands or even millions of shares for less than $100 at times. Penny stocks aren’t hard or expensive to buy. Penny Stocks 101: Trading Penny Stocks for Beginners Luck Is Your Worst Enemy With Penny Stocks At the very least, they had a general understanding before diving in, head-first. Maybe it was luck or, maybe it was experience that helped those users make money with penny stocks. Going to message board sites like Reddit and seeing members flaunt massive winnings can be hard to ignore. The first of which is to learn first, then trade later. So if you’re just getting started in the market and penny stocks are something of interest, it’s important to know some basics.
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