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What To Do With The Best Penny Stocks To Buy

Jun 8, 2008
The usual question I get when people find out I trade penny stocks is "so what are the best penny stocks to buy?"

This is usually followed by the old 'war stories' of how they could have done this or they could have done that, and if they did they would have made a gazillion dollars in 5 minutes. Then they'll go on about how an analyst was wrong with his pick, or that a trading system they invested in doesn't work.

Balderdash!

You see the problem with these guys (and gals) is that they don't know how to trade. And because they don't know how to trade, they won't be able to choose the best penny stocks to buy even if it hit them in the face.

Knowing the best penny stocks to buy without knowing how to trade it is like driving a Ferrari without knowing how to drive it. And that my friend is a dangerous game.

If you're getting that queezy feeling in your stomach like "dude, you're talking about me", don't fret. All you need are some rules. These are general trading rules that will allow you to take your trading game to another level, and more importantly, when you do come the best penny stocks to buy, you'll know what to do with them (make money!):

"Plan Your Trade And Trade Your Plan"

Just like NFL teams go into a game with a solid game plan, you need to have a plan in place for when you will enter and exit the trade, and how much you are willing to risk on the trade. The best penny stocks to buy aren't always the best unless you plan to make money with them.

Capital Preservation Is Crucial

Making profits is important, but it is even more important to preserve your capital when trading. Risk no more than 5% in each trade and you'll survive long enough to keep trading. For overnight trades, if you're having trouble going to sleep, that's a surefire indication that you are risking more than you are comfortable with. Close the position so you can get some sleep.

Befriend The Trend

Never go against the trend. If the market is bullish, go long. If you the market is bearish, go short. Why swim against the tide, when it is a lot easier (and profitable) going with the flow?!

Check Your Emotions At The Door

In every trade the emotions of greed and fear are having a good old tussle inside you. Kick them both out, because they will both make you broke. You need to be rational and follow your rules if you are to make consistent profits.
About the Author
Vincent Hartell has great suggestions on how you can become an accomplished trader. Visit his site to get the rest of the rules for effectively trading the best penny stocks and advice on the best penny stocks to buy.
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