Can You Really Profit From Day Trading Penny Stocks?

When you imagine a day trader, what mental picture comes into your head?  Is it someone making continuous successful trades, banking off of their every decision?  Or rather someone throwing money hand over fist at bad trades until they are completely bankrupt?  Regardless of which visual picture you have in your head, you can push them to the side, because neither is true.  Successful day traders actually make quite a few good decisions, but these aren’t without making some bad ones along the way.  Here are some of the ways that you can hedge your risk while day trading penny stocks.

One of the best ways to ensure that you remain in the day trading game for the long haul is to hedge your risk to lose it all.  By keeping less than 5% of your total portfolio tied up in day trading, you’ll ensure that it is only possible to lose a max of 5% through bad decisions, if you make them.  Keeping your overall day trading strategy to include less than 5% of your investment account, you’ll remain safe should anything go wrong with trades you make.

You’ll also need to learn the terminology used in trading circles, or risk leaving money on the table, possibly even losing it.  Knowing what the different terms mean will help you make decisions based on underlying determining factors.  Factors such as the current economic climate that surrounds the company or stocks you’re interested in, as well as what factors effect changes in prices of different stocks you’re looking at.  If you don’t understand the terminology, you may be unable to execute trades at the prices you want, or end up missing out on fast moving deals because you’re fumbling your words.

Leave the technology to the large portfolio traders who really need them.  As a beginner trader, you can easily become overwhelmed by the sheer amount of information being presented to you.   Most of these trading tools do the job, and quite well, but unless you know how to trade the old fashioned way, by yelling and screaming (at your computer screen), you’ll never completely understand how to utilize the tools properly.

One of the last tips you can be given when thinking about day trading penny stocks is to keep your ego at the door.  Emotions will play hell with the size of your portfolio when you are day trading, so unless you want to make bad decisions, continuously, you’re going to want to make sure all of your trades are based on logic, rather than emotion.  As long as you follow these tips, and keep your risk as low as possible until you learn the ropes, you, too, can buy penny stocks successfully.