3 Rules for Successful Penny Stock Trading
17-Year-Olds Are NOT Penny Stock Gurus
At first, he was a whiz kid who made a fortune from trading penny stocks.
But ultimately, he was just another fraud.
A few years ago, 17-year-old Mohammed Islam's story hit the news circuit after it was announced that he'd amassed a $72 million fortune from trading penny stocks. But as it turns out, it was all a big lie.
Of course, I don't fault Islam. He's a stupid kid who was doing what stupid kids do. I did worse things at his age. The only difference is that none of it was covered by the media.
Regardless, Islam ended up being paraded around as some kind of sinister con man who'd duped the press and the public. But that's unfair.
If you believed the story, that's on you. And if you were one of the people trying to track this kid down for advice, then I have a shiny new bridge I'd love to sell you...
I use the saga of Islam Mohammed as an illustration.
In the world of penny stocks, no one's pulling in $72 million per year.
That's not to say you can't generate some serious wealth from trading penny stocks. It happens all the time. But if you set yourself up for unrealistic expectations, you'll be disappointed.
I've been playing penny stocks for a long time. I've had my ups, and I've had my downs. But through it all, I've always come out ahead. And it's because I consistently exercise caution and good judgment.
Some say fortune favors the daring. And that's true. But it doesn't favor the foolish.
If you think you'll become a millionaire by trading penny stocks for only a few months, you're nuts. If it were that easy, we'd all be millionaires.
The truth is that if you want to make money in penny stocks, you have to be disciplined and realistic. You should also follow some basic rules that have proven to be integral to wealth creation for penny stock traders...
Rule No. 1: Don't Believe the Hype
If it sounds too good to be true, it is.
You won't be able to invest $1,000 in a penny stock tomorrow and then cash out a month later with $750,000. It won't happen. It never happens.
I get the urge, too. We all do. But don't let greed trump reason. Hitting enough consecutive trades out of the ballpark to turn $1,000 into $750,000 within 30 days would require the same sort of luck that it takes to win the Powerball. And that's not hyperbole, either.
Given that the payoff for even the most modest lotteries is well into the millions, you're probably better off doing that than attempting to nail 75,000% returns within four weeks...
Rule No. 2: Take the Money and Run
You don't get rich with penny stocks by sitting on them after a huge surge in share price.
The great thing about penny stocks is that, if played right, you can generate double-digit gains within a very short amount of time. But just as quickly as those gains can add up, they can also fall hard and turn your fast gains into fast losses within only a matter of hours.
I know that sometimes it's hard because the quick calculations in our heads can put huge dollar signs in our eyes. But don't be blinded by greed. Just be motivated by it. You know the old saying: "Pigs get slaughtered!"
Rule No. 3: Commit!
Penny stock trading isn't for people who only want to invest in something and then walk away.
If you're not connected during trading hours, not to mention premarket and aftermarket hours, you're putting your wealth-creation strategy at risk. This is why penny stock trading really isn't for everyone.
Successful penny stock traders are flexible, nimble, and ready to act at a moment's notice. Sometimes, buying and selling opportunities only last for a few minutes. If you're not ready to pounce, you're not ready to trade penny stocks.
These rules aren't hard and fast, but they're the rules by which I live and prosper. They've served me well for more than a decade. And I maintain that they can help you in building incredible wealth with penny stocks.
That's all for now.
Until next time,
Pro Trader Today