Set Ups For Penny Stock Trading: Where To Begin PDF Print E-mail
Written by Eric Conklin   
Tuesday, 26 October 2010 19:38
In order to be successful trading penny stocks, you need a solid trading plan for every step of a trade. Setting up a trade is key and should never be underestimate, and should have a close eye kept on it all the time. That said, these are the steps I recommend going through when setting up your next trade in penny stocks.
by EricConklin


To make it by trading penny stocks for a living, you need a solid trading plan for every step of a trade. The set up is just as important as anything else, and should have a close eye kept on it all the time. With that in mind, these are the steps I recommend going through when setting up your next trade in penny stocks.

At the start, you need to take a close look at fundamental sock values. These indicators will often show you a lot of good data on how quickly the company is advancing in terms of earnings. Your target should be a pick that shows significant improvements in earnings and reduction in debt over the last year or two.

Next of all, analyze the technical pattern of the stock. Go through the price movement in the stock. Is the trend taking it up higher? If there is a strong support that has just been rebounded from and is going to retrace up again as a result, there is a good rebound opportunity when the stock bounces back up.

In addition, you need to have a well placed stop loss under the stock in case the trend doesn't pan out. Keep a solid stop loss at one ATR below the nearest line of support. Doing this allows you to remain safe in case the stock reverses on its current trend.

As far as penny stock trading is concerned, your set up is key. Having a poor set up means having a much greater chance of missing a trade. Don't shrug off this aspect of your trading strategy while working towards a solid trade. If you ignore this, you could wind up eating some hefty losses. So keep your head in the game!

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

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