Using Penny Stocks to Escape the Rat Race

Sarah Lifestyle

The job is always the same. No matter what cubicle you sit in, you have to deal with terrible people, overbearing bosses and tasks that never seem to end. The job of the HR department is not to help you get more from the company, but to protect the company from you. You will not get any help from the people you work with. So what do you do?

Start trading penny stocks. Well, start slow, but learn how to day trade and you work your way over to penny stocks. The profits to be had will not just fall into your lap but they are there for those that want to work hard and learn the techniques that are available. Day trading is not for the faint of heart though. The way to get good at day trading penny stocks is to learn your capacity for risk and learn how to increase it.

Risk management is such a vital part of day trading. There really is no substitute for being able to keep track of dozens of trades each day and know your exposure in each one. Being on top of your risk profile is a such an important way to get to a profitable level as a day trader. The key is knowing that you are going to lose some trades. It is inevitable. There is no way to be batting 1,000 on day trades.

So the key is to keep your losses to a minimum on the losing trades and maximize your profits on the ones that you do hit. Getting to a 2:1 profit:loss ratio is very important in day trading. What that means is that you only need to hit 60% of your trades in order to be profitable. When you are trading penny stocks that is a very good way to go.

One important thing to note is that day traders don’t consider penny stocks that actually cost under one dollar. For that designation, day traders are looking at stocks that cost anywhere from $2-$10 per share. That is where there is opportunity for profits. As long as you can do your research and make a real effort to stay organized.

Being able to keep track of your trades is very valuable for day traders. Staying organized and on top of all the money that you have out in the market is a way to keep your 2:1 ration intact and to stay ahead of your tax burden. Record keeping is absolutely vital when you are called upon to talk about your income for the year.

Keep in mind how long it takes to get good at trading penny stocks. There are stories out there of veteran traders taking a small sum, even under $1,000 and turning that into six figures in just under two months. But that type of feat is just not possible for a day trader that is just starting out. It takes years of screen time and some drubbings handed out by the market before you take a real shot at a crazy feat like that. You need to take your lumps and learn your ropes.

Penny stocks can be profitable, when you take the time to learn how to get good at them. Just remember that mantra and you will be a profitable day trader eventually.