subject: How To Make Millions In Penny Stock Investing? [print this page] Penny stocks are simply common stocks trading for less than 5 dollars per share, which are traded off the board and over the counter through quotation services like the OTC Bulletin Board. And so the question remains of whether investing in these stocks can make you a millionaire. The following factors factors influence making money on trading penny stocks:
Personal Attributes
Not everybody is suited to penny stock investments. You must possess the right characteristics that make for a millionaire in the penny stock market, of which the most important are:
* You must be willing to take on higher degrees of risks in order to reap higher rewards. It must be noted that penny stocks are more volatile in nature than mainstream stocks.
* You have to be emotionally and intellectually stable to cope with the extreme ups and downs that penny stocks will go through while these are in your hands.
* You should have the capacity to control your emotions so that these never rule your decisions over financial matters.
* You need to have the passion, persistence and patience to research your prospective and present penny stocks in order to make informed decisions on when to purchase and when to sell them for a profit.
As you will observe, these personal factors are also true of the Big Board. The main difference is that penny stock trading is so much more volatile than Big Board stocks but the rewards are so much bigger when you play your cards right.
Strategic Factors
Playing your cards right, of course, means that you have strategic factors on your side. You might have the right personality but when you fail to adopt these strategies you could lose your shirt.
First, you must formulate and follow an entry and exit strategy. It should serve as your ultimate guide on when and where to purchase and sell your penny stocks. If it says you must sell when your profit reaches $50, sell at that price. If it says stop when you reach $50 in losses, stop betting on the stocks. And no matter how many insider information and hot tips you hear from so-called friends, always follow your entry and exit plan that you have formulated based on informed decisions.
Second, you have to invest only in what you can afford to lose. Always remember that you can lose much more than you invest in penny stocks, with wild swings in the profit and loss direction by as much as 50 percent both ways. For example, if you can afford to lose just $1,000 because it is just winnings from a lottery, then invest only a thousand bucks on penny stocks.
Third, you can use stock filters or stock screeners. These are software designed to take the burden of sifting through hundreds of choices and thousands of information to arrive at the desired decision. The end result should be a list of hot penny stocks that you can look into for investments.
by: Mike Singh
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