Personal Finance & Money Asked by Xhero39 on July 24, 2021
I am a student studying and I got interested in Penny Stocks, because I hope to gain money earlier in my life.
I hope to invest the first amount of money that I may earn by part time job; cleverly on stock trading. I know it’s risky, But suggesting that I would learn the best I can, and ask for many advices, and also watch all the DVDs out there for teaching trading Techniques (like Timothy Sykes and so on)
I hope you read my message and I’m looking forward to your reply.
How long is a piece of string?
This will depend on many variables. How many trades will you make in a day? What income would you be expecting to make? What expectancy do you need to achieve? Which markets you will choose to trade?
Your first step should be to develop a Trading Plan, then develop your trading rules and your risk management. Then you should back test your strategy and then use a virtual account to practice losing on. Because one thing you will get is many losses. You have to learn to take a loss when the market moves against you. And you need to let your profits run and keep your losses small.
A good book to start with is Trade Your Way to Financial Freedom by Van Tharp. It will teach you about Expectancy, Money Management, Risk Management and the Phycology of Trading.
Two thing I can recommend are: 1) to look into position and trend trading and other types of short term trading instead of day trading. You would usually place your trades after market close together with your stops and avoid being in front of the screen all day trying to chase the market. You need to take your emotion out of your trading if you want to succeed; 2) don't trade penny stocks, trade commodities, FX or standard stocks, but keep away from penny stocks. Just because you can buy them for a penny does not mean they are cheap.
Correct answer by Victor on July 24, 2021
1) Don't trade individual stocks. You expose yourself to unnecessary risk.
2) Pick a fund with low expenses that pays a dividend. Reinvest the dividend back into the fund.
To quote Einstein: The greatest power on earth is compound interest.
Something is wrong with the software of the site. It will not allow me to answer mark with another comment. So I have to edit this answer to be able to answer him.
@mark No, I am not hoping the price will go up. The price is only relevant in comparison to the dividend. It is the dividend that is important, not the price. The price is irrelevant if you never sell. Dividend paying securities are what you buy and hold. Then you reinvest the dividend and buy more of the security. As I am buying the security with the dividend I am actually pleasantly surprised when the price goes down. When the price goes down, but the dividend remains the same, I am able to buy more shares of the security withwith that dividend. So if the price goes down, and the dividend remains the same, it is a good thing.
Again, the site will not allow me to add another comment.
@mark I profit from my investment, without selling, by receiving the dividend. I used to be a speculator, trying to get ahead of the market by 'buy low, sell high' but all that did was make money for the broker. I lost as much as I gained trying to do that. The broker made money on each transaction, regardless if I did or not. It took me decades to learn the lesson that 'buy and hold' of dividend paying securities is the way to go. Don't make my mistake. I now get, at least, 5.5% yeald on my investment (look at PGF, which forms the backbone of my investments). That is almost 0.5% per month. Each month that dividend is reinvested into PGF, with no commission. You can't beat that with a stick.
Answered by Jack Swayze Sr on July 24, 2021
Get help from others!
Recent Answers
Recent Questions
© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP