WHAT ARE PENNY STOCKS?
Contrary to popular belief; penny stocks aren’t just securities priced under $1. The SEC (Securities and Exchange Commission) defines penny stocks as any stock trading under $5.
As per the SEC’s Penny Stock Rules:
The term "penny stock" generally refers to a security issued by a very small company that trades at less than $5 per share. Penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board (which is a facility of FINRA) or OTC Link LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.); penny stocks may, however, also trade on securities exchanges, including foreign securities exchanges. In addition, the definition of penny stock can include the securities of certain private companies with no active trading market.
Trading at $5 dollars or less, penny stocks offer you the ability to buy large quantities of a stock for a very low price. It is no wonder; new traders are drawn to the world of trading penny stocks. On the surface, it makes sense why folks are more inclined to invest in these lower priced securities. I suspect, there is some ‘logic’ in believing it is far wiser to buy 10,000 shares of a stock that cost (.25 cents) than 100 shares of a stock that cost ($25 dollars). Or maybe it’s more logical to think that it’s easier for a .25 cent stock to trade up to .50 vs a $100 stock doubling to $200. Whatever the reason, penny stocks tends to attract a lot of new investors and for those reason; I feel it is our obligation to inform you all about penny stock trading.
In this article, I will do my very best to discuss what I think you need to know starting out as a penny stock trader.
TOP 10 TRADING RULES FOR SUCCESSFUL SWING TRADING
I have been involved in the stock market for over 15 years. I invested, day traded, scalped and everything in between. It’s been a very, very, very long road to say the least. Along my journey as a trader; I have ‘blown up’ a few accounts, went from losing A LOT, to losing a little, to break even and eventually profitable. In this blog; I will share with you the top 10 trading rules you’ll need to implement right away to become successful at trading.
I am a swing trader; so you will see the term, ‘swing trader’ or ‘swing trading’ often but these trading rules for success can be applied to any style of trading.
Before we dive into our top 10 rules for successful swing trading; let’s briefly define what I mean by ‘swing trading’.
STOCK MARKET TERMS
A COMPLETE LIST OF STOCK MARKET TERMS FOR INVESTORS, SWING TRADERS AND DAY
Our Goal: To build a POWERHOUSE of successful traders (and help you find more winners).
If WE win, YOU win
As a new trader, you’re going to come across these key stock market terms often and it will be helpful to your learning if you understood them. To assist you in becoming a better trader; I have complied a very thorough list of stock market terms that are used by investors and traders across the world every day. But before we get into that let’s get a few things out the way.
There are many different ways in which you can approach the stock market. You can invest, position trade, swing trade, day trade and scalp. The most common approaches to trading the stock market is via investing, day trading and our go to method, swing trading. Find below a brief explanation for each approach and why we prefer some more than others.
All this stuff might come off a tad bit corny. After all, isn’t this a website dedicated to stocks, trading, investing and candlesticks?
So a couple of things. Believe it or not; I too at some point concluded that having a “Daily Motivational” page is corny AF (azz *uck) but decided to go forth with it anyway.
As the main driving force behind this website, newsletter, 15th year confessions of a stock trader - whatever you want to call it - I’ve seen some things.
If you’ve taken a few minutes to peruse shortmetina.com, you’ll stumble on the fun fact that in my prior life I was a Therapist. I spent over 7 years formally studying human behavior and have some bad ass looking 8 x 11s (Bachelor of Arts & Master of Science) vouching for my competency.
The recent volatility in the Stock Market have many scratching their heads. For the past two years or so; we’ve had the beauty of a market that only went up. We did not have this chop that we’re experiencing now. For folks that are relatively new to the stock market, do understand that these sorts of market moves are not as ‘uncommon’ as you may think. Granted, we have not experienced them in a few years but for those (like myself) who’ve been in the Market since the early 2000s; this is somewhat familiar territory. So, to the question that’s on everyone’s mind.
How do you get through these types of markets?
Original article published on 5/2/2016
What is risk-reward and why is it important in swing trading stocks? Unless your are EXTREMELY good at picking solid companies and have the patience level similar to that of Warren Buffett to hold for decades and decades; trading requires you to be governed by rules.
Position sizing is something I reference to often when talking about my trades. It’s different for everyone. That is, if you ask 20 traders about position sizing; you will more than likely get 20 different answers.
So, I am not here to debate what’s the better approach. Although, I would like to hear your thoughts behind it (drop your comments at the end of the article)
At any rate, I see position sizing as a necessary nuisance (there are times I want to put 100% of my money behind a trade-but I wont) to trading survival.
How often do you check the quote of a stock you own? If you’re anything like me; you’re usually plugged into the market 12-15 hours out of any given day. I want to say; since early 2000s; not one single day has gone by without me checking a quote in some fashion or another. This, in my opinion, is beyond ‘crazy’ behavior and can possibly work against you if you’re not careful.
I guess you can add this blog, along with the others I have written, under the category “trader psychology”.
I think a lot, I am a thinker! And this thought came during one of my forever happening thinking sessions.
I am not sure if you’re aware but Electric Car Maker, Tesla (TSLA) is up over 2000%.... YES 2000% since IPO-ing at $17 in 2010. To put that into perspective; if you invested $10,000 in this company when it IPO-ed and left your money in Tesla; that 10k is now north of a quarter of a million dollars ($250,000).
Question: If you made 15 losing trades in a row, taking loss, after loss, after loss; would you be able to take trade #16 without hesitation?
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