Yes, you can make a good living on trading penny stocks. This is not for long-term value investors, but for day traders ready and willing to make money off of volatility.
Penny stocks are not actually priced by the penny. The current definition is stocks that are priced under five dollars per share. When you begin to explore penny stock trading you find out that it might seem like small potatoes, but you can invest small amounts of money and reap large returns. What you need is the right strategy and intelligence.
Penny stock trading is not for the faint of heart. The companies that trade at this level are prone to volatility so if you are investing in penny stocks, you need to be prepared for the possibility of total loss. These stocks can see a 50% drop in one trading day or a 100% jump in value just on news reports of a new patent or earnings statements.
Penny stock trading is all about finding that one stock about to make a big move and riding those gains to serious profits. Similar to any momentum trading strategy, you are not in it for the long-term investment. You need to find that diamond in the rough that is going to outperform the market in one day. Then you sell, bank those profits and move on to try to find the next one.
That is why risk management is so vital in penny stock trading. You need to have a short term outlook and be ready to cut and run from any trade that is starting to look bad. Penny stocks are so volatile and unpredictable it is nearly impossible to be a penny stock investor. You need to stick to penny stock trading, with a short-term gain in mind.
A few tips to keep in mind: Avoid the pink sheet penny stocks. They are nothing but trouble. And stay away from any promoted stock that the market carnival parkers are touting as the next big thing. Only trade penny stocks in volume. That is the only way to make enough money to make trading penny stocks worthwhile.
If you want to learn more about trading penny stocks, look up Warrior Trading on Facebook. The instructors, daily chat room and research materials are incredible resources for a novice day trader looking to make a living in that world.