10 Tips Every Penny Stock Trader Should Know

Trading penny stocks is one of the riskiest investments in today’s market. Stocks are extremely cheap for a reason, which makes them so volatile.

That being said, Benzinga spoke with Timothy Sykes, Peter Leeds and Ross Cameron to understand the key strategies that help make him one of the best penny stock traders in the world.

  1. First practice with “Monopoly Money”: Prove you can make money trading penny stocks with simulators before you start trading with real money. The market will always be there, so experts stress how important it is to practice first instead of possibly seeing detrimental losses in your first week of trading.
  2. Penny Stocks move in a very inorganic way: So, with proper research, you can invest and be successful just by trading price action.
  3. Penny Stocks move for dumb reasons, but you can still profit from them: According to Sykes, he looks to see if penny stocks receive investment from a billionaire, are featured in a major media outlet, or have a recent listing on .com websites.
  4. Experts do not diversify their portfolio: The three experts we spoke to rarely have more than a penny or two in their portfolio.
  5. There is no “best broker”: However, some of the brokers to check out include E-Trade, i-Trade, Lightspeed Trading, and Interactive Brokers.
  6. Be creative: If you want to find a penny stock that could be a hidden gem, check out the company’s operations. Leeds, the author of “Penny Stocks For Dummies,” recommends calling investor relations or even showing up at company headquarters unannounced.
  7. No Penny Stock is the next Amazon: Remember that most penny stocks are outright frauds.
  8. Experts can hold stock for 6 minutes or up to 6 months: If you are a day trader, you can buy and sell stocks on average every five or 10 minutes. But, investors looking for long-term play and not wanting to give up too much momentum can hold penny stocks for up to six months.
  9. Penny Stock Trading doesn’t need to take up your whole day: Most penny stock traders only spend one or two hours a day trading.
  10. Stay tuned for notable titles: If you find something new that might be notable, research it, hit up the chat rooms, and see if the news might warrant a stock hike in the near future.

© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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