What Are Penny Stocks, And Why Should You Care?
If you have never heard of penny stocks before and just did a search on them, quickly read below!Penny stocks make up a vast majority of trading in the U.S. Penny stocks are low priced stocks, often less than one dollar. These stocks are traded sometimes in the tens of thousands of shares due to how low they are priced.
Often time penny stocks are small companies trying to get bigger. They go public to raise capital to fund their product or service that they offer. Some of these companies actually make it and become very big. Those who found them early reap the rewards.
Penny stocks can escalate in price very rapidly and can create substantial profits. These stocks can be very volatile so holding them for the long term is not advised. The best time to take profits on a penny stock is as soon as you have them.
Penny Stock Trading Tips to Use in 2017
Trading penny stocks can present some tremendous opportunities to you. These stocks can move quickly and can product huge gains. It’s not uncommon for a penny stock to see gains of 50% or higher in just a few days’ time. If you get into several penny stocks that provide such gains, you could be looking at your account growing very fast. In order to maximize profits, some tips worth following include:
When you get into a penny stock, follow price averaging techniques. This means you buy more when the price falls. Do not jump in all at once. Buy slowly. As long as the stock gains higher than any of your entry points, you could be in for a great profit. But just as penny stocks can go up they can also go down so never chase a stock.
Set limits on your losses. If you don’t want to lose more than 20% then make sure you set that limit. Once this limit is reached your stock will sell and you can move on to your next target. One of the most important things about trading is to make sure you set rules and actually stick with these rules. Trading with emotion can get you into a lot of trouble and also trading with no plan can mean trouble as well.
Use limit orders. When you set a limit order you are basically saying what price you want the stock at. Doing a market order allows a market maker to sell you the stock at a higher price than you may want. Getting into a stock higher than you would want can significantly affect the outcome of your profits or make losses that much larger.