Buying Penny Stocks

This whole business of penny stock trading is really quite simple, if (and ONLY if) you approach the markets with a trader’s mentality, not a gambler’s mentality. In a lot of ways, being a good trader is like being a good poker player; you have to realize that you’re going to fold way more hands than you’re going to play. It’s just the way the probabilities play out. But if you keep this in mind and learn to expect it and accept it as simply part of the price of playing the game, you won’t get frustrated or discouraged when every single trade doesn’t go your way. You have to have the mental fortitude to watch your first 10 trades go to pot, while still sticking to your trading plan even when it looks like you’re going backwards. This is vitally important. You have to learn to trade by principles, not by feelings or emotions. The one thing that can really trip you up in this trading game is when you start getting an ego or thinking that somehow you can “bully” the markets into doing what you think they should do. And when I say “bully”, I mean doing things like adding to your position when you’re already losing, or continuing to dump money into a position that’s obviously going south. All of this stuff is completely in vain. You’re never going to be able to get the market to do what you think it should do; you have to look at what the market is currently DOING, and base your trading style around that. The market, as volatile as it is, is really the constant, and we are the variables. We can’t sit here and say that we’ve gotten our butts kicked by the markets, when really it’s a case of us kicking our own butts by not responding properly to what price action the market was offering us. When you truly begin to understand price action, you will really start to see the value of letting the markets be the markets, and quit trying to bring ego into the equation. Ego will be your worst enemy, because you will begin to turn blind to plain old common sense, and begin these little “vendettas” against the markets after you have a couple of losing trades. Dude, here’s the deal…when the trade goes your way, take the doggone money and run, and when you’re stuck with a loser, learn your lesson and get the heck out of the trade before you try in vain to salvage something that needs to be cut off. As the famous adage goes, “cut your losses and let your winners ride”.

Let me tell you something right now: There are traders who trade faithfully by certain indicators, such as the Simple Moving Average, or the Williams %R thingy, and get consistent good returns that way. But at the same time, there are also very successful traders who literally enter and exit the market at random, but keep a very tight rein on their capital management. The key in all things is capital management—how much you are going to risk in any one trade. This was one of the hardest lessons I had to learn early in my trading days was how not to blow my entire account out on one trade. Once you learn how to trade with more than a gambler’s mentality, you won’t try to hit a “home run” with every single trade; you will realize that enough base hits will earn you the home run anyway, and the monetary effect is still the same. Traders who know how to do this right will normally only risk about 1% of their total trading capital on any one trade. This way, if the trade goes south, they are still operational with 99% of their trading capital intact. Another way to look at this is, you would basically have 100 chances to make a successful trade if you’re only risking 1% of your total account balance on any one trade. This beats the heck out of “betting the farm” and potentially only getting two chances to even place a trade. Now you tell me—who has a better chance of pulling off a successful trade—the guy who makes 100 attempts, or the guy than only makes 2 attempts? This is the main reason why you don’t “risk your whole wad” on one trade. Believe me when I say, opportunities to profit in the markets come around all the time…there’s truly no shortage of trading opportunities in penny stocks. The real question is, will you be ready when the opportunity presents itself? I have often heard that “success is when opportunity meets preparation”. Let me emphasize that part of your preparation as a trader is going through enough dumb decisions, losing trades, hurried trades, and other novice mistakes to finally get to the place where you calm down and realize that you will simply have to trade with a set of principles that you stick to and don’t deviate from AT ALL. That’s one of the reasons why I started Trading Penny Stocks Online in the first place, was to hopefully cut the learning curve for some of the newer or novice traders out there. Believe me, I’ve been through every trading phase you can go through. I have dug so deeply into technical analysis that I couldn’t hardly see the price chart anymore due to the plethora of indicators I had overlaid onto it, and I’ve read all kinds of trading journals and magazines and articles, and I have tried to make this thing as complicated as I could so that I could think I’m doing something really sophisticated. But at the end of the day, and after years of ups and downs and positive & negative experiences, I finally have settled in my mind that I just need to be patient, and stick to the simple things that work, versus the complicated things that have the appearance of working, but are really just a bunch of hot air.

So what can you glean from Trading Penny Stocks Online? Why even read this? Mainly because I have included a simple but effective trading methodology for recognizing price chart patterns that will narrow down the penny stocks to buy versus the ones to stay away from. If you use this simple method, I can almost guarantee that you’ll have winning trades that will more than make up for your losing ones.