At some point in every investor’s journey, they begin to get…
You know what I’m talking about.
You’ve seen the ads all over the web. IQ Options, Forex, “How I made $5000 in 48 hours”. Those kinds of ads.
These high volatility investment vehicles seem so appealing. You could double your money in a matter of weeks (days even)! You look at your portfolio – 4.5% annually for the last. what. 5 years? How bland!
So we begin to look into day trading.
Day trading can be a great way towards finding financial independence. It is a method for escaping the confines of corporate America, where people work in depressing gray cubes and take orders from feckless middle managers with no real skills.
Of the various investment vehicles suitable for day trading, there is none that I prefer more than penny stocks!
Finding penny stocks to watch can be a way towards profitable day trading. Furthermore, I consider them relatively safe compared to investments such as Forex, options and the like. We’ll get into why later.
What are Penny Stocks
Penny stocks are small-cap stocks that are prone to violent fluctuations out on the market. Those violent fluctuations may scare away institutional investors and long-term investors, but that is music to a day trader’s ear.
Volatility is how day traders make money. And it’s what draws investors like us with capital to spare to the table.
Why I consider Penny Stocks a Safer bet
I’ve tried other investments such as Forex trading before. The thing that gets me the most is the “lack of control” I feel with regards to Forex. I guess I’m a fundamentals type of guy.
While you could apply fundamentals to Forex, the majority of strategies focus on technical indicators. That just makes me uneasy.
With Penny Stocks, I still get to do my due diligence. Pore over financial statements, news, yada. So Penny Stocks is something familiar and comfortable to me.
Where can I find Penny Stocks to Watch?
Penny stocks to watch are on lists on various websites throughout the Internet. The key is finding the reputable sites and following those sites to find penny stocks that will help make you money. Finding the right stocks is the most important part of day trading. It is how you separate yourself from the 90% of day traders that lose money.
Finding penny stocks to watch is not hard. What you want are stocks that are trading on pink sheets or the over-the-counter bulletin board. That is the simplest place to find penny stocks to watch. Penny stocks used to be listed on actual pink sheets, back before technological advances brought trading online, so that is where the name comes from.
What tools do I need to trade Penny Stocks?
When you make the decision to start trading penny stocks, you need to have the right plan in mind. Every trade needs a plan and needs to adhere to a strategy.
Joining a day trading education site like Warrior Trading is one of the best ways to learn day trading strategies. It is your best hedge against learning on the job, meaning going out into the stock market with your hard earned savings and blowing it as you learn the ropes.
It helps to get screen time in a trading simulator. Screen time is the most important thing you need to accumulate as a beginning day trader. That is how you begin to spot patterns as they happen so you can make quick trades that allow for maximum profit. A trading simulator is a computer program that allows you to make trades at the speed of the real market with virtual currency. That is where you can learn on the job with little to no risk.
Just Like the Real Thing
The trading simulator at Warrior Trading offers Level II quotes, which gets it very close to real market conditions. The instantaneous order execution means that it will bring you so close to regular trading your head will spin. The metrics are a great feature too. The program will gather all your trading data during your time in the simulator so you can get accurate performance reports and make sure you are on the right track.
Warrior Trading students are encouraged to trade for at least one month in the simulator, so that you can make a real effort to get profitable, before you start risking actual cash. In Warrior Trading, you get to start with 100K in buying power, mimicking the ideal starting place for aspiring day traders.
Over to you
Have you ever tried your hand at Day Trading? What are your thoughts on Penny Stocks? And do you have any particular platforms to recommend? Let us know in the comments below!