Marking time in a boring cubicle job can seem like a no win situation. You have to stick in out in order to make enough money to pay your bills and save for your retirement, but you can’t seem to get your company to pay you what you actually are worth. And when you are stuck like that, it never feels very good. So you are stuck drinking or buying expensive things or shopping your heart out in order to make yourself feel better.
But there is a way out of the cycle. Learn how to day trade. Now, many people might tell you that day trading and getting into penny stocks and other momentum based investing is too risky. And there is some truth to that. Every venture carries some amount of risk. It is certainly true of day trading. But day trading can be very lucrative, if you figure out how to manage that risk.
First off, understand the penny stocks in the eyes of a day trader are not the same as penny stocks for other investors. They don’t actually cost a penny. For the savvy day trader, they are not looking at much more than stocks that trade at $2 to $10 per share. There is no way that you are going to make enough trading actual penny stocks to make a profit.
Still, you need to acknowledge the risk of trading penny stocks. These companies are not very well known and they tend not to be trading on the major exchanges. That means that they are not subject to the same kind of financial disclosure that you might see with firms that are trading on the New York Stock Exchange. It is much harder to know what the company is all about and what the fundamentals look like.
Which is why you don’t have to worry about the fundamentals as a day trader. What you need to worry about is the technical indicators, the float and how quickly you can leverage all that information into a profit. Look to make 20-30% on penny stocks and you will be fine. When you see that gain and then you sit and wait, looking for a 200% or 300% or 500% return, that is when you see the stock tank and your profits go down the drain.
Many penny stocks out there are subject to pump and dump schemes. That is where investors or market makers buy up a bunch of shares and then talk up the company with the intent of driving the share price up and up. That is where you see valuations that are crazy and driven by hype. You can still profit off that, but only if you really know what you are doing. And if you know who and what to ignore.
To be able to trade penny stocks profitable, you need to be able to learn how to day trade with efficiency. You should find a day trading education site that will teach you about momentum trading and how to spot the right stock at the right time. It takes strategy and skill, not just luck. And then you need to learn how to manage the risk, so that you don’t get caught with your pants down. The profits are there, as long as you can keep your winners big and your losers small.
Practice is what it is all about. Learn how to day trade, spend your time in front of screens getting good at it, but make sure that you have a handle on what you are doing. Get good before you start risking any real money.