Tuesday, May 12, 2015, AM | Leave Comment
Buying stocks represents a very popular way of getting a share of a company. Also, selling them when they have a higher value is a smooth technique of making money.
However, it is not that simple, because there are many factors that influence the ups and downs or share prices.
Otherwise everyone would be doing it and getting rich. For starters, the safest lane a rookie in this field should take is handling penny stocks.
It should not be concluded that penny stocks are some sort of a dream-come-true share haven, where everyone can get their ratio of the share cake.
On the contrary, they should be dealt with in an even more careful way, since people often con others when trading these stocks.
Their advantage, however, lies in their inexpensiveness. Stocks are described as penny when their value is lower than $5.
That is why they are the best entrance in the world of share exchange. But the most important thing here is self-discipline. Whatever you do, you have to limit yourself in order not to waste your money. Penny stocks function in the same way.
Start with playing
If you decide to start a career as a stock speculator, give yourself a trial period, during which you should learn the basics of this craft. Start by determining an amount of money that you would dedicate to this business.
For instance, it could be $20,000. Now imagine that you have that money and go for your first penny stock purchases. Of course, this will be a simulation, also known as paper trading.
Although you will not be using real money, but only the sum that you have imagined you posses, make your business decisions in a careful and serious way. Write down every transaction that you would make, as well as the clients and the dates.
Also, read magazines, articles published on relevant sites and completely immerse yourself in this field.
Feel the real thing
After you spend a couple weeks or even months simulating stock exchanging, it is time to experience what it looks like for real.
If you noticed during the exercise period that you were on the winning side, don’t get carried away with that initial success.
Investing too much money at the very beginning might not only discourage you from further work with stocks, but also throw you into debts.
First you need to learn to trade and then take larger bites.
So, when you begin with real purchases, you have to be very harsh towards yourself and choose only a small number of penny stocks, so that you only get the right feeling.
Watch your sources
The whole story about penny stocks will often lead you to disappointments, not in the business itself, but in human nature.
In this affair, many people employ the pump and dump method, in which they artificially increase the value of penny stocks and then when naïve investors bite the bait and start buying the stocks, the tricksters quickly get rid of them and leave the gullible traders bare-handed.
It happens quite often, like in this case of fraud. Of course, every stock investor can protect themselves from such schemes by trusting only reliable sources.
Also, it is not smart to work via low-reliability sites and companies. Sites like Nasdaq and AMEX are among the most trusted sites in the branch and sticking to them is a great way of protecting yourself from cons.
Trading stocks is an amusing and mind-boosting method for earning money. It forces the brain to think harder and calculate many potential outcomes of every stock-exchanging transaction.
As long as you don’t spend whole days in front of your computers, it can be a nice combination of hobby and means for additional income.
Dan Radak is a web hosting security professional with ten years of experience. He currently works with a number of companies, closely collaborating with a couple of e-commerce companies. He’s also interested in penny stock market. He is also a coauthor on several websites.