How can you make money on penny stocks?
Big traders, hedge funds trading on NYSE, are considered very good if they make 10% on their money over a year. This may be good for somebody investing 10mln, but what about somebody with 5k to invest, or even 2k? This doesn't make any sense!
What if you could trade stocks that will make you 20%-50% in one trade, in 5 minutes? That is what Penny Stocks are all about!
You have to remember that 90% of traders lose money, and the main reason behind it is lack of training – or rather, unwillingness to learn. They jump in after seeing one or two videos and get wrecked.
So how exactly do people make a living with penny stocks?
People learn, spend months to a year training themselves, do Paper Trading to test their theories and to learn more. There is no substitute for live price action and participation!
When they think that they are ready, they lodge money to their live account. And they trade tickers like BLNK (see April 2016 or July 2017 v current price) – that thing can run!
How much money do I need to trade Penny Stocks?
Brokerage firms have different limits as to opening an account. You can find a good few with $500 to $2000 limit. Limit, however, is not all;margin trading and shorting availability is also very important. We talk a little more about brokers in our training.
Do you know how much money you will make after a year if you start with 4k and add 20% every month without withdrawing? Over 35k! But if you start with 5k and add 30% every month, you will end up with over 100k! It is in your reach! You just need to learn what stocks, when, and how to trade. BLNK on 04.20.2016 went from 24 to 44 in one day, this is more than 50% on your money if you catch the meat of the move! There are many opportunities in Penny Stocks every day!
In short, you can start with any amount that you can afford, but to make a living you would need to build your account first, and this is assuming that you know what you’re doing (you have consistently positive trades). There are literally thousands of people that started with a few grands or even less and end up making 5 or 6 figures.
There are also those that made millions, and all of that with Penny Stocks!
How do you trade with Penny Stocks?
Due to the risk and volatility, you complete a trade of most penny stocks within a one day, keeping them often only a few minutes or hours. Very rarely will you hold them overnight or for a few days. This is called the Day Trading.
Another type of day trading is Scapling. Scalping is characterized by very small price changes being used (2-3%). In scaping, you must use a bigger stock amount to actually make money unless you are happy with, let’s say, $70 per trade or less.
Swing trading is a longer-term technique where you hold stock for days, weeks, or months in anticipation of trend reversal.