10 RulesI don't agree with some of these but, they do come in handy.
10 RULES ABOUT PENNY STOCK TRADING:
Rule # 1 - In our opinion, you shouldn't invest more than $2000 into any one penny stock. These issues are speculative, and thus contain some degree of risk. Besides, even a small investment can pay off significantly due to the large price movements of penny stocks.
Rule # 2 - Don't buy stocks if you feel rushed. Don't chase after a rising price. The best investment strategy involves acquiring shares before price rise begins.
Rule # 3 - Keep a portion of your portfolio in cash. A 25% to 40% cash position enables you to respond to price movements and news with strategies such as averaging down or diversification. A dynamic portfolio can greatly improve your returns.
Rule # 4 - Sell when you've made good profits. Too often investors hold on to a stock that has multiplied five or six times in value, hoping for an even greater rise. If you must hold on to shares for the long haul, then it may be a good strategy to sell half your holdings when the price has doubled, and let the rest ride for the longer term.
Rule # 5 - Don't sell from panic. Penny stocks are very volatile, and can rise or fall greatly within days or hours. Also understand that if you are adverse to any degree of risk or volatility, then more conventional investments such as bonds may be more appropriate for you.
Rule # 6 - Use a broker that charges low commissions. With penny stocks, trading frequency will generally be great and trade values small, so a discount broker will help you avoid high commissions.
Rule # 7 - Check your stock prices at least once a day.
Rule # 8 - Never buy stocks because you heard a hot tip from a friend or associate. Only trust a proven recommendation service, or your own research.
Rule # 9 - Give yourself a powerful advantage by doing your own research. Or even better by using the advice of a penny stock investment professional such as PeterLeeds.com.
Rule # 10 - Have fun. Penny stock investing is much more exciting than other types of trading, as the potential rewards are greater and will come more quickly.