The Fin Forum

As you venture on the unsecured path of day trading penny stocks, you must understand the fundamentals utilized by all successful penny stock traders and exercise these schemes through dealing in paper (trading exercise with no money).

Once you understand and appreciate the perils involved in day trading penny stocks, you must then master the maneuvers utilized by experienced penny stock investors. You must learn both the penny stock long play as well as the penny stock short play. I encourage you to exercise both of these ahead of you putting real money at risk.

In penny stock terms, a long play is like investing in a growth stock, but you’re buying that growth stock really early before a whole lot of history or data is available for it. When you invest in a long play, you’re investing in a penny stock company for the long term, even years. You can really make a ton of money if you hit upon the penny stock of a company with a great product and ton of potential.

Both of these penny stock techniques will be employed in buying penny stocks in general but only short plays will be utilized in day trading penny stock.

Penny stock short plays are more for the bold-hearted day trading penny stock investors. Short plays involved extensive pattern analysis to determine how a stock channels. To understand channeling, just imagine two straight flat lines placed along the jagged line of a line chart; the lower line represents the average low values of the stock and the higher line represents the average high values with the space between representing its channel. After you’re sure you have identified a clean pattern within the stock’s shifting values, a bold penny stock trader buys at the low side of the channel and sells at the high side.

In penny stock trading, this is often very risky for 2 specific reasons: one, penny stocks are highly susceptible to manipulation by scammers and two, penny stocks lack liquidity. Thus they will be hard to trade away fast, so you buy that penny stock hoping to quickly dump it but then you can’t get rid of all your shares before it drops down in value again.

Please be responsible and reasonable when you evaluate penny stock data obtained on the Web. If you really want to succeed with penny stock trading, then you need to exercise an extra dose of skepticism and caution when assessing data on a penny stock, especially if you intend to day trade penny stock.

Yes you can make a ton of money through penny stock trading, but do not underestimate the amount of risk involved and do not buy penny stocks without doing your due diligence.