The small initial outlay affiliated with trading in penny stocks is something that attracts a lot of people because it suddenly brings the prospect of trading stocks into the realm of affordability . The mistake many make however is when they believe they will suddenly hit it rich with their first few investments. These people often get over-zealous, suddenly lose all their capital and then become disillusioned with the whole thing.
But with the right advice from the get-go you can set yourself up for a lot of success
Basic penny stock concepts
The terms virtually speak for themselves, but the two most prevalent types of investment someone trading in awesome penny stocks can make. Let's take a peek at them here.
Going Long
When people invest in penny stocks and end up keeping them whilst the share price rises in line with the overall market they are said to be going long. This approach normally takes many many years to come to fruition.
This idea can sometimes catch newcomers out though because whilst the market does in fact always follow an upward trajectory when you observe it on a long enough time scale, no-one can actually say with a 100 % guarantee that any particular individual companies stock will do the same . Of course, it is unrealistic to really think that no companies have or ever will cease trading and this is why it is still inevitable that investors will eventually lose money when - not if - this happens .
Going long, investors will experience the roller coaster ride that is the ups and downs of the stock market . But they must sit tight and weather the storms, trusting that eventually the value will once again rise up and provide a profit a long way down the track .
The buy and hold strategy is oftentimes very profitable, but over the long term. A lot more money can be made in the short term by going short .
Going Short
Volatility scares a lot of people, but those who are willing to play the game with short term penny stock investments can stand to turn this volatility into a profit .
By buying and selling over very short periods of time investors can make wads of cash . Penny stock traders can turn a profit by even buying and selling the same stock over short periods of time . But things do have the ability to go downhill fast and investors need to be aware of this risk and be willing to take it in order to experience the potential benefits .
However if you can find some awesome penny stocks to buy up at bargain basement prices and you have the experience and acumen to know exactly when and how to sell them on you will be on to a winner .
When going short, timing is of the essence and this is something that you can learn the hard way, or you can take advantage of the various learning resources online to give yourself every chance of success with your early dealings . One of the ultimate skills you will develop over time is being able to time your transactions, knowing exactly when your stock is about to make a move .
But with the right advice from the get-go you can set yourself up for a lot of success
Basic penny stock concepts
The terms virtually speak for themselves, but the two most prevalent types of investment someone trading in awesome penny stocks can make. Let's take a peek at them here.
Going Long
When people invest in penny stocks and end up keeping them whilst the share price rises in line with the overall market they are said to be going long. This approach normally takes many many years to come to fruition.
This idea can sometimes catch newcomers out though because whilst the market does in fact always follow an upward trajectory when you observe it on a long enough time scale, no-one can actually say with a 100 % guarantee that any particular individual companies stock will do the same . Of course, it is unrealistic to really think that no companies have or ever will cease trading and this is why it is still inevitable that investors will eventually lose money when - not if - this happens .
Going long, investors will experience the roller coaster ride that is the ups and downs of the stock market . But they must sit tight and weather the storms, trusting that eventually the value will once again rise up and provide a profit a long way down the track .
The buy and hold strategy is oftentimes very profitable, but over the long term. A lot more money can be made in the short term by going short .
Going Short
Volatility scares a lot of people, but those who are willing to play the game with short term penny stock investments can stand to turn this volatility into a profit .
By buying and selling over very short periods of time investors can make wads of cash . Penny stock traders can turn a profit by even buying and selling the same stock over short periods of time . But things do have the ability to go downhill fast and investors need to be aware of this risk and be willing to take it in order to experience the potential benefits .
However if you can find some awesome penny stocks to buy up at bargain basement prices and you have the experience and acumen to know exactly when and how to sell them on you will be on to a winner .
When going short, timing is of the essence and this is something that you can learn the hard way, or you can take advantage of the various learning resources online to give yourself every chance of success with your early dealings . One of the ultimate skills you will develop over time is being able to time your transactions, knowing exactly when your stock is about to make a move .
About the Author:
Gary Stelling has written for a number of finance and investment web sites. For more info about penny stock trading please visit his website penny stock concepts
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