| When it comes to the stock market, nothing is more | | | | randomly invest in stocks. There are reasons why |
| profitable and/or volatile than penny stocks. Although | | | | prices of stock go up and down, and the truth is, |
| it might seem easier to make bigger profits from | | | | that a lot of beginner investors will invest like they're |
| Penny Stocks, it does involve a similar mentality as | | | | gambling on a casino table... based on a matter of |
| regular stock trading. | | | | luck. |
| Over the course of an investing career, most | | | | Expert traders will always look at graphs and charts |
| beginners and even intermediate level traders will fall | | | | to see why, and when to buy shares of stock. |
| into the many traps of trading. If it happens that you | | | | There are plenty of powerful software's out there to |
| see yourself falling into any of the "traps" below, | | | | help automate most of the research, but it's |
| understand that it's natural to do many of them, but | | | | important to understand that researching stocks first |
| you must train yourself not to fall victim to them... | | | | is a critical step. |
| 1. "Falling in love" with a stock, a company, a | | | | 3. Buying penny stocks that are pumped on message |
| technology or a "story" | | | | boards, spam emails and bogus hot stock tips |
| Often times, when beginner traders first start | | | | This happens more than we see, but when we read |
| investing, they get caught up in the moment of | | | | about "easy-money" from investing early in a new |
| trading. While it's perfectly okay to enjoy the stocks | | | | penny stock, it entices us to think that only a select |
| you're buying, and even like the company, any stock | | | | few are buying. The reality is, the initiators of the |
| trading expert will tell you that getting too | | | | "stock pump" are almost always the only ones to |
| emotionally involved with the stocks you're buying | | | | profit. |
| can kill your profits. | | | | It's always a wise move to avoid the allure of |
| A company's "story" might be important to know for | | | | impulse investing in any stock being advertised in |
| long-term investing, but for short-term trading, falling | | | | general. Do the research first... |
| in love with a company's story isn't a wise investing | | | | And this leads us to the last of the "traps". |
| move. Especially for shorter-term investing, it's | | | | 4. Failure to control emotions |
| important to do diligence on penny stocks before | | | | This one's simple... don't fall into the trap like most |
| investing big. | | | | traders do of basing trades on emotions. Trading |
| 2. Trading and picking stocks like if you were | | | | with out a strategy that clarifies when to buy and |
| gambling on a casino | | | | when to sell a stock is dangerous. In order to trade |
| The second trap a lot of beginners fall into is to | | | | successfully over and over, you need to have clear |
| assume the stock market is like gambling, and to | | | | buy and sell signals. |