The 10 Commandments Of Trading Penny Stocks
January 31st, 2008 by admin
1. Thou shall always use proper asset allocation and manage risk.
If you diversify your cash for trading stocks you will limit your downside risk and allow the winning trades to take care of themselves.
2. Thou shall always use limit orders.
Never buy penny stocks with market orders. You will never get a good price over time.
3. Thou shall always use stop losses.
Protect your capital by using stop loses at around 25% to 50%. This still holds true when your stock starts to make a gain. Be disciplined and re-adjust frequently.
4. Thou shall always do your homework.
Before you buy a stock be sure to do your homework. After you have bough a stock and are holding it, be sure to keep up with the homework.
5. Thou shall trade along with the stocks momentum.
If hedge funds or mutual funds are buying into a stock, it is often a winning strategy to follow in their path.
6. Thou shall pay attention to politics.
Be aware of the trends in politics because it will have a powerful effect on the way a stock performs.
7. Thou shall never hold emerging market penny stocks for the long term.
Companies that do business in emerging markets will have more economic risk over time. Be sure to always prepare for corrections and unexpected events.
8. Thou shall not worry about paying taxes.
Don’t worry about having to pay taxes on your winning trades. But do worry about holding onto a penny stock that is starting to loose its momentum.
9. Thou shall never panic.
No one every made a good decision while panicking. Stay calm and make intelligent decisions. There will always be a better time to sell.
10. Thou shall always hold onto some cash.
Make sure you always have some cash available for trading. This ways you will be prepared when opportunities arrive.
Never trade stocks on emotion or hope. Trading stocks is not a game of emotion. You need to stay focused and logical. Do not trade a stock because you hope it will go higher, act as if you have ice water in your veins.
These commands were created to help solve this main problem and will never let you down. You need only to remember and use them.
Peter Hill is an author and penny stock adviser. He runs an informational website and newsletter with a wealth of penny stock recommendations, strategies and trading guides. Make sure to take advantage of this and much more at http://www.DoublingStocksNewsletter.com
Popularity: 6% [?]
Posted in Online-Stock-Trading, Penny-Stock |