Trading Penny Dreadfuls.
Why should the big rich corporations have all the fun? The small investor can seek out large returns as well..That is of course if they knew only how.
Are you looking to trade penny dreadful stocks to earn a good return on your money? Penny dreadful stocks can be profitable for some, but it can also be a sobering money-losing experience.
So what should you watch out for when you trade penny dreadful stocks? What are some of the strategies that professional traders use when trading in the penny dreadful sector?
Technical analysis that uses statistics for forecasting price fluctuations is one approach that is most commonly used in share trading. However, because it is difficult to track changes in fractions of a cent, there simply isn’t enough data to be able to analyse these stocks accurately.So for obvious reasons Technical analysis is not often used much when trading penny dreadful stocks.
One of the biggest forces that can drive penny dreadful stock prices is gossip. Whether it’s online in discussion forums or chat rooms, or offline with publicity and various media, gossip can and does cause rapid swings in many a penny dreadful share price.
Therefore, you have to keep your ear to the ground when you are trading in penny dreadful stocks.
1. One technique that some experts use who trade regularly on penny stocks is to focus on one particular stock.
2. They get to know the stock inside and out; that is they get to know the company behind the stock intimately,They look at who the directors are. They also look for any news about that company, plus anything else that might somehow affect the stock price.
So target one stock, listen to the gossip, and see how the stock responds. The louder the gossip gets, the larger the potential for a big price swing.
Many traders who trade penny dreadful stocks are small-time investors who don’t have more than $1,000 of investment capital. These traders trade penny dreadful stocks because it gives them more shares for their money. Where they might be able to buy dozens of shares in a major stock exchange such as the Australian Stock Exchange (ASX), they can buy hundreds or sometimes thousands of shares when they trade penny dreadful stocks.
The potential for loss is just as big, however. It’s almost closer to gambling than investing. The money used is strictly risk capital. Once the money is gone, it’s gone. So only use money you can afford to lose.
Another group of traders that trade penny dreadful stocks are amateur investors who use the buy and hold strategy. They purchase a stock and retain it for long periods of time,sometimes years, hoping that the stock skyrockets at some point in the future.
Unfortunately, this strategy rarely ever pays off in the way that the investor had hoped. In the long-term, the stock could end up being completely worthless.Plus it locks up your money for the duration of the investment. When it might have been better off investing that money elsewhere.
Trading penny dreadful stocks can certainly be a very profitable venture. It certainly isn’t a traditional method of investing, like investing in the old standbys such as bonds and mutual funds.
However, trading penny dreadful stocks isn’t for all people.One of the main reasons for this is because you need to have a very high tolerance for risk, a willingness to analyze every minute detail of your chosen penny dreadful stock, and some intestinal fortitude.So you can sleep well at night.If you can’t then penny dreadfuls are not for you.
By all means have fun with penny stock trading, but don’t expect to stumble into the next Rio Tinto for cents on the dollar. Mind you though, RIO started off small at one time.
And remember, as with anything else in life with high potential for gain there is also very high potential for loss. Do your homework, follow your rules, and plan to prosper.But also have fun and if all else fails treat it all as learning experience.
I wish you profitable trading.