Trading penny stocks is one of the riskiest investments in today’s market. The stocks are extremely cheap for a reason, and this causes the stocks them be so volatile.
With that being said, Benzinga talked with Timothy Sykes, Peter Leeds and Ross Cameron to understand the key strategies that help make them one of the top penny stock traders in the world.
- Practice With "Monopoly Money" First: Prove that you can make money trading penny stocks through simulators before you start trading with real money. The market is always going to be here, so experts highlight how important it is to practice first instead of possibly seeing detrimental losses in your first week of trading.
- Penny Stocks Move Very Inorganically: So, with proper research, you can invest and succeed by just trading the price action.
- Penny Stocks Move For Stupid Reasons, But You Can Still Capitalize Off Of This: According to Sykes, he watches to see if penny stocks receive an investment from a billionaire is being featured on a major news outlet or had a recent .com website listing.
- Experts Don’t Diversify Their Portfolio: The three experts we spoke to rarely have more than one or two penny stocks in their portfolio.
- There Is No “Best Broker”: However, some of the brokers to check out include E-Trade, i-Trade, Lightspeed Trading and Interactive Brokers.
- Be Creative: If you are interested in finding a penny stock you think might be a hidden gem, check out the company’s operations. Leeds, the author of “Penny Stocks For Dummies,” recommends calling investor relations or even showing up at the company’s headquarters unannounced.
- No Penny Stock Is The Next Amazon: Remember most penny stocks are flat-out frauds.
- Experts Might Hold The Stock For 6 Minutes Or Up To 6 Months: If you are a day trader, you may be buying and selling stocks at an average of every five or 10 minutes. But, investors who are looking for long-term plays and do not want to trade much off momentum, might hold penny stocks for as long as six months.
- Penny Stock Trading Does Not Need To Take Up Your Whole Day: Most penny stock traders spend only one or two hours a day actually trading.
- Stay On The Lookout For Notable Headlines: If you find new you think might is notable, research it, go to trading chat rooms, and see if the news might justify the stock moving higher in the near future.
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© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Alright, buckle up because we're diving into the world of penny stock trading, and I'm not your average commentator—I'm a connoisseur of the craft.
Let's dissect this article like a seasoned trader eying a potential jackpot. First, let's talk practice. The pros, including Timothy Sykes, Peter Leeds, and Ross Cameron, emphasize the importance of honing your skills before diving into the volatile sea of penny stocks. They advocate for a Monopoly Money phase, where you prove your mettle in simulators. Trust me; this is the smartest move you can make.
Now, onto the core principle: penny stocks move like a drunk person trying to dance ballet. Inorganically, that is. With thorough research, you can predict and ride the erratic price action. Keep your eyes peeled for the stupid reasons these stocks move—like a billionaire's investment or a cameo on a major news outlet. It's all about capitalizing on the irrationality.
Diversification? Forget about it. These experts swear by a lean portfolio—usually just one or two penny stocks. It's quality over quantity in this game.
Brokerage choices? While there's no proclaimed "best broker," E-Trade, i-Trade, Lightspeed Trading, and Interactive Brokers make the cut. Choose wisely, but remember, your skills matter more than the platform.
Creativity is your secret weapon. If you suspect a hidden gem, channel your inner detective. Call investor relations, surprise a company at its headquarters—be bold. Peter Leeds, the maestro behind "Penny Stocks For Dummies," knows the drill.
Here's a reality check: no penny stock is the next Amazon. Most are fraudulent, so keep those expectations in check.
Now, the time factor. Day traders, listen up. Your world revolves around minutes—buying and selling every five or 10. But for the long-term players, holding a penny stock for six months is a possibility. It's a diverse market, my friend.
Trading doesn't have to consume your entire day. Most successful penny stock traders clock in one or two hours. Quality over quantity, remember?
Lastly, be the Sherlock Holmes of trading. Stay vigilant for notable headlines. If you smell something noteworthy, dive into research, hit up trading chat rooms. Information is your ammo.
So, there you have it. A crash course in penny stock mastery, brought to you by the experts. Happy trading!
