How To Select Trading Strategy For Penny Stocks
There are two types of people in stock market, one is known as investor and other is traders. Both look for profitable investment opportunities in the market. And the strategies for investors and traders are different.
Investors are those whose investment time frame is longer and trades are those who invest or trades for short term. One should recognize themselves whether they are investors or traders, as it helps to select proper investing or trading plan.
Fundamental analysis which includes financial data and financial ratios to find how sound the company is you are going to invest. Fundamental analysis is useful for investors whose investment horizon is long. But if you are a trader then you should have trading system based on technical analysis.
Also there are many types of stocks available in the market such as penny stocks. These are though very risky but if you trade penny stocks with sound knowledge of technical analysis you can make big money in less money.
Making money with penny stock is not difficult, all you need to find a penny stock company that has good prospects in near future. Also you should have a trading strategy that has good success rate. Technical analysis is good for short terms trading so make your trading strategy based on it.
To find profitable short term trading opportunity you need to learn the skills of technical analysis as it is essential tool for short term trader. Make a simple trading plan that has good success rate and test it by doing paper trading initially.
Good entry and exit points are essential for successful trading, though it is not all you need to use other techniques too such as stop loss technique and money management technique. By using these technique with a trading system that has good success rate say seventy per cent success rate will improve your chances to make profit.
Though penny stocks are risky but you can make big money with penny stocks too. All you need to have a good trading system with acceptable success rate say seventy to eighty per cent and along with stop loss and money management methods you will make fortune.
Many people love investing in penny stocks because the percentage gain for penny stocks is very big compare to other stocks. For ex. if the stock of ABC company trading at $ 10 and it rises to $ 11 so your gain is $1 or 10% . While if you find a penny stocks that is trading say at $0.10 and rises to $1 so your gain is $0.90 or 900% !
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