Successful Trading Ideas

We all have a desire to be successful. We also have a tendency of admiring people who have made it in life. We admire successful entrepreneurs, politicians, and celebrities. Finance professionals are some of the most successful people in the world.Hedge fund managersin particular make hundreds of millions of dollars every year. Surprisingly, most money managers don’t run large factories. They don’t employ hundreds of professionals. No. They have a small team that spends their time looking for opportunities. They screen companies to buy and invest in them. That’s all. There are other money managers who like being involved in the companies they buy. They buy shares, become board members, and then steer the company to their direction. How then do you become a successful stocks and shares trader?

 

Penny stocks are the villains of the financial market. They are the companies nobody likes to own for a long time. They are companies which have probably fallen out of favor with the large investors. Maybe the company was once a high-flying institution that for some reasons made some poor choices. Investors responded by dumping its stock and there was no one to buy them. Maybe the company is a fad after all.

 

These are some of the reasons why companies become penny stocks. There are traders who have made a lot of money trading these companies. There are also investors who continue holding the company with the hope that a new upward trend will start.

 

The main benefit of day trading penny stocks is that they are really cheap. Their share price is often less than $1. This means a simple positive movement can lead to a massive growth of your funds. When it goes against you, bad things can happen. You can lose your funds within minutes. There are risks and opportunities when trading penny stocks. Unless you are careful, chances are that you will fail.

 

As previously mentioned, there are thousands of stocks out there for you to make money in. These stocks and shares are listed both in the over the counter market or in the large stocks exchange. Companies list their companies so that they can get money to expand. Investors who buy the shares expect to make money when theshare priceappreciates and when the company distributes its profits in form of dividends or share buybacks.

 

Investors and traders have different views of the listed companies. Investors buy companies with the hope that the share price will rise. They also anticipate to make money when the company distributes the dividends. A good example of an investor is Warren Buffett who has owned companies like Coca-Cola for decades.

 

Traders on the other hand are not interested in dividends. They are not interested on the fundamentals of the company. Instead, they are interested in the short-term share movements. They are comfortable buying stocks and shares in the morning and selling them within a few hours.

 

As stated in the previous paragraph, traders are usually not interested in the companies that they buy. They don’t care whether the company has a huge debt or not. They are only interested in the short-term movements the stocks make on a daily basis. They will don’t give a damn if a company they have shorted goes bankrupt. Instead, they are happy that they have made money from their trade.

 

There are other penny stock traders who aim to identify undervalued companies which have a potential to grow. Some of these companies are usually in the pharmaceutical industry. These are companies which have come up with drugs to cure certain diseases. For these drugs to be accepted, they must undergo tests by the Food and Drug Administration (FDA). Before they are accepted, some companies usually don’t have any earnings. These traders aim to find these companies and load their shares. If the FDA accepts the drugs, they cash in as more investors gain interest in the company.

 

A common question from new penny stock traders is on the best way to find good penny stocks to trade. There are many brokers in the market today. These brokers are classified as either discount brokers or full-service brokers. Discount brokers is a stock broker who offers services at a reduced price. They don’t offer investment advice. Full-service brokers on the other hand are brokers who offer multiple services such as investment advice and brokerages. Most discount brokers operate in the internet. There are other brokers such as Robinhood who offer services without a commission.

 

To buy and sell penny stocks and shares, you first need to identify a good and credible broker who offers penny stocks. Most of them do. Those that don’t offer penny stocks from the over the counter market offer companies from the large exchanges. In these exchanges, they have hundreds of companies that trade for less than $5. According to the SEC, these companies can be classified as penny stocks.

 

We constantly receive questions on the best penny stocks to buy. However, we don’t like going to the specific stocks. This is because we don’t like it when traders buy stocks because we recommended them. What we like doing is guiding traders on the qualities of the best stocks to buy. We tell them what we look at so that they can make their own decisions. This follows a traditional saying that says that it’s better to teach a hungry person how to fish, rather than give them a fish. Ideally, you want to trade stocks and shares of companies that are actively traded. This will make it easy for you to exit once the price target is reached. Also, you should consider companies that are listed in the large exchanges. This is because you can easily get more information about them. They are required by law to release disclosures such as financial releases and when the directors buys or sells the stock.