Day Trading Penny Stocks – Tips & Truths

Posted by fts on 07 August 2010

There is no question that day trading penny stocks is one of the fastest ways to make money in the stock market. It is also wrought with rumors, half-truths, and bad advise for someone new. As someone very experienced with penny stocks, let me share with you a few tips and truths that I wish I had known when I first started.

Tip:
When you first begin this venture you should be aware of NASD rule 2520 for pattern day traders. It states that anyone who makes 4 or more round trip day trades in any 5 business day period must maintain an account balance of at least $25,000, or risk having their trading privileges suspended.

Truth:
The penny stock market is full of scams, frauds and terrible companies that will never make a dime of profit. O.k., does that mean you should avoid them? Not necessarily, even though these companies are bad investments, they can still be great trades. The main thing is that you know going in that this is a very short term trade, and not a long term investment.

Tip:
Follow the money, and the crowd. When I first began trading penny stocks I had a tendency to over think it. Instead of following a newsletter or picking service, I wanted to find stocks on my own without any help. Partly because I couldn’t believe that it could be as easy as following everyone else. I finally learned that winning in the penny market can be as simple as following a crowd, and thus the money. Now, your crowd can be a free newsletter, a premium newsletter, or even a message board. Whatever it is, if there are enough people following the same crowd, there is money to be made. For me, I have had the most success following a premium newsletter.

Truth:
Premium newsletters are paid by companies to promote their stock. I mention this because some traders seem to have a problem with it. So let me remove the blinders, burst your bubble and tell you that yes, sometimes when you get an alert from a newsletter telling you how great this company is and how the technicals are amazing, often times it’s because they got paid $2,500 to tell you that. So what, you think that’s a bad thing? How else will they get word out about a big contract or new product? Trust me, when Google had their IPO they spent plenty of money on promotion. so just relax, take the information for what it’s worth and hope that everyone who reads that newsletter likes what they see so that you can ride that promotion as far as possible and book some profit.

These are just a few things I learned the hard way over the years. Just remember, you can make a lot of money day trading penny stocks by keeping a cool head and using some common sense.

To learn more about penny stocks visit day trading penny stocks

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Want To Trade Stocks? Know What You’re Getting Into!

Posted by man on 20 July 2010

Trading stocks can be a complicated feat. That is if you do not know what you are getting into. But of course, if you take time to study and understand its rudiments, you may be surprised to discover that it is actually easier than most people think. Before you make a move to enter the world of stocks, be sure that you know first the ins and outs so you won’t lose your way around.

Day Trading Versus Stock Investing

While investing in stocks is a similar endeavor, it is different in terms of duration. Investors study the companies that they invest stocks in, they hold the stocks for many years, and they pay long-term capital gains when stocks climb in value. Day traders, meanwhile, place orders 24/7 and only hold the stocks for a few hours then pay tax on profits they earn at a short term rate.

Knowing yourself, your personality, and preferences will give you an idea on which one to choose. If you have a full-time job, day trading can be too stressful and time-consuming. However, if you are the type who prefers instant gratification and is in it for the rush, day trading is the right option for you. Just see to it that you have the discipline and right attitude to stick to a proper day trading plan and that you have the ability to stop when the need arises.

Day Trade Courses

Enrolling in a day trade course is one of the best ways to prepare for this. Be sure that before you participate in any course, you find out about the reputation of the instructor first. Choose those that have not only the expertise and experience but also the reputation for being reliable and objective. The instructor should not be affiliated with any brokerage company and should not force or even try to sell you books or automated trading software.

Online day trading course can be a smart option if your schedule is hectic. Not only are there countless courses offered by different universities online, the online route is also quick, easy, and convenient for you. Aside from that, you can get your hands on some important audio and video clips as well as e-books and charts that will reinforce and further advance your studies.

If you do decide to take an on-site course, be ready to pay more as these courses are a little more expensive. But the advantage to this type of course is that you get hands on education from the teacher. Just see to it that the schedule of the classes will not conflict your work schedule.

Whether you go for the online or offline route, ensure that you find a course that offers comprehensive training and education in the different aspects of day trading.

Stock trading can earn you big money but only if you play your cards right. To be able to do that, be sure that you take the necessary steps to study and understand the field so you know exactly what you are getting into. Roaming around clueless can be a recipe for financial disaster.

Shane is a financial advisor, stock broker, and professional consultant. He enjoys reporting on the latest stock market happenings and offering advice to both fledgling investors and experienced day traders.

Visit his site to learn more about daily stock picks and day trade course.

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