Getting Started with Penny Stocks
Investing in penny stocks can be a very tempting proposition for some because of their low entry price in comparison to the regular stocks. However, the truth is that penny stock investments can expose you to higher risks unless you know exactly what you are doing and where you are putting your money.
Therefore, the best and the safest approach to getting started with penny stocks is to rely more on professional stock advice from an experienced online penny stock specialist and base the investment decisions on hard facts and figures rather than side with your instinct or open the door to guesswork.
Learn the Basics
Choose a top professional penny stock specialist website and walk through it patiently. Check out all possible information and advice provided on the site to help you widen your perspective about penny stocks trading in general, and about targeted penny stock companies in particular.
Familiarize yourself with various penny stock trading terms and concepts. Try to understand the difference between penny stocks and mainstream stocks, and why it becomes critical to acquire reliable and verifiable information about penny stock companies before you invest. Learn how to stay away from biased advice and avoid costly mistakes in your penny stocks trade.
Begin with Paper Trading
One of the smartest ways to make a start with penny stock trading is to first engage in “paper trading” for a few days. This is imaginary trading in penny stocks and does not involve any real money. You can start with a certain amount of imaginary money, and deploy that money in specific penny stocks that you identify for investment.
Thereafter, follow the price movements of those stocks for a certain period of time, and make your exits from the stocks at the opportune moments. At the end, you can review how much net gain or loss you made in your trade. This is just a theoretical exercise which will give you confidence before you actually go ahead and trade with real money in penny stocks.
List your Targeted Stocks
As a new penny stock trader, your first goal should be to diversify your portfolio by investing in two or more penny stocks that reveal promising prospects. This will help spread your risk. At a time when you are barely starting out with penny stock investments, one or two quick setbacks can disappoint you, so it makes sense to start conservatively.
However, if there is a strong recommendation for a particular penny stock, you may consider starting with that one stock alone. Furthermore, try to invest in phases rather than putting all your money in a single basket in one go. Maintain a short-list of your targeted penny stocks, and keep investing in them as and when good buying opportunities arise in these stocks.
Stay Focused with a Reliable Source of Information
Once you have chosen a good online penny stock specialist, maintain your focus with it as far as possible. Follow their tips, alerts, reports and other research inputs closely, and make your penny stock trades accordingly. Do not allow yourself to be distracted by too many information sources from multiple directions. There have been studies that show that too much information to the brain actually impedes our ability to make a clear decision or one at all.
Many information sources have vested interests in particular penny stocks, and you should remain judicious about such sources. Do not get tempted to make costly errors by believing unverifiable information from questionable sources. The Internet is a sea of information where you need to be extremely picky about sources that you can trust your money with.
Penny stock trading and investing is all about objectivity, cold facts and figures, and sharp analysis. Keep your emotions strictly under a leash, and you can enjoy excellent returns on your penny stock investments.