| 10 Top Tips For Penny Stock Success |
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| Written by James Spacey |
| Monday, 08 November 2010 17:56 |
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When it comes to trading penny stocks you have to play by the rules. Your rules. When you set them, don't forget them. Carve them in stone. They are the way you are going to make money.
When it comes to trading penny stocks you have to play by the rules. Your rules. When you set them, don't forget them. Carve them in stone. They are the way you are going to make money. Establishing your rules is the first thing. Then you must remember them and always stick to them like glue. When it comes to trading penny stocks you'll need discipline to succeed. Write these rules somewhere you can see them and read them regularly. Rule 1: I must follow my rules. It's important that this is your first rule. If you are ever in doubt about whether to bend any of your other rules, come back here. Unfortunately, it's human nature to want to break rules. Don't do it (unless you like losing money). Rule 2: I will never risk more than 3% of my total portfolio on any one stock trade. You must protect your portfolio. Don't be bold and try to risk it all (or even a significant portion of it). As your portfolio grows, so will your 3% and you'll increase your profits. But if you lose it all... Rule 3: I will never hesitate to cut my losses at between 5% and 15%. Some traders have an even lower tolerance for loss. The key point here is to have set points (stop loss) within the limits of your tolerance for loss. Stay informed about the performance of you stock and stick to your stop loss point. Rule 4: Do not set price targets. This is a style that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits. The highest profit trades are the ones that just keep going up and up. You will catch these occasionally. Rule 5: Make one style your own. Dedicate yourself to one method rather than alternating between different styles. This way you become expert at it. Any other way and you run the risk of being average at a number of methods, but proficient at none. Rule 6: Price and volume must be your guides. Put blinkers on and block your ears to the sound of opinion and rhetoric. It's all about price and volume. Just because you hear something on a finance report doesn't mean anything. Stick to the facts. Rule 7: Never ignore signals. Don't make excuses. If an entry signal shows up you have no excuse not to take it. Rule 8: Ignore intra-day data. Every trading day includes variations in stock prices. If you rely on intra-day data and momentum trading you'll make mistakes. Rule 9: Have rests. You have to be aware of stress and incorporate a routine into your day that sees you take time away from your charts and computer. Keep physically, mentally and emotionally fit and active and you'll be more successful. Also, you'll be able to stay with trading for longer throughout your life. Rule 10: Get above the average. To be successful in the trading business the key is to simply stay above the average. Stay consistent, focused and disciplined. Remind yourself of your rules regularly and if you start to feel you are straying to any extent force yourself back into line. This is the key to your success. Submit yourself to as tough a scrutiny as you put your trades and you'll be better than most. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. James Spacey writes about a variety of topics including food and where to buy penny stocks. This article, 10 Top Tips For Penny Stock Success has free reprint rights. |