Basic Rules of Trading Penny Stocks

In fast Moving markets we witness many bear and bulls, like New Frontier Media (NASDAQ:NOOF) gained more than 50% to close at price of $2 yesterday, or If we look at the stocks under $1, Cellteck Inc. (OTC:CLTK) was top gainer among Penny Stocks, surged more than 300% to close at 0.0144.

We get a lot of emails from our followers that how readers would know the right time to enter the market, how the risk can be minimized while trading Penny Stocks.  So here we are going to tell you few basic rules you must know before start playing with these risky bulls and bears.

You must know these basic rules before trading penny stocks

Stick to your opinion only as long as it’s profitable

Never forget to use orders limit while getting into a stock, pick an entry price and stick with it. Don't chase any stocks, “you stick to your opinion only as long as it’s profitable”. There will always be another trade idea right around the corner.  Never follow market orders to start any trade. By following market orders, you will be a playboy in hands of market maker to fill you at whatever price they like and leave you vulnerable to getting poor fills so it’s better to follow the penny stock newsletter you trust.

Only risk your extra cash on Penny Stocks

A very basic rule of trading penny stocks (or any other stock) is that only risk the money which you can afford to lose, If you are trading with the money that you will need at the end of the month to pay house rent or your child’s school fee, immediately stop doing this.  Trade penny stocks only when you have some extra cash. It does not mean that you can’t make money by trading penny stocks; it’s true that we can make a lot of money while trading penny stocks but there is always a risk, but a famous financial saying is “more risk means more return”.

While trading Fast Moving Stocks you need to be extra smart

Smart Trading means you should enter in right time and exit before the stock takes a U-turn, This becomes more important when you are trading penny stocks. Always remember to stay alert, it you own money you are playing with. You can easy learn a lot about how a stock may act in the first 10-15 minutes after the market opens. If it’s trading with unusual volume but not showing much movement it means a lot of people are selling that stock. So simply be alert, always double check your order and make sure you are entering order correctly.

Don’t be too greedy

We know that Penny Stocks can run more than what we have expected from them but at the same time they can swing down too. If you’re in such a situation, consider selling them either on small loss or small profit. Don’t be too greedy, small profits in a row can give you big profits. When you start a trade determines your exit point and when your stock reaches at that price just book your profits, don’t wait for watching how up it can go.

About Us Fast Moving Stocks is the name which is considered as pro in Penny Stock Market, We have been trading these small cap stocks from long time and we can help you to build your portfolio. Simply signup to our free newsletter and watch the show.