The major positive point of differentiation of Penny stocks with other category stock is the return potential to give returns. Penny stocks have a potential to give huge return to an investor which the big company’s stocks are unable to provide. The return from penny stocks is very quick. The return are so huge that the stock can get double to even triple in very short time.
There are many successful traders who have made lot of money put of penny stock trade and had become millionaires. These are like Warren Buffet, Rakesh jhunjhunwala etc. There is a long list of millionaires being produced from penny stock trade and they have followed some great strategies. The few important strategies for making good money out of penny stock trade are:
- Buck the Trend: Successful traders always buck the trend. Here is an important statement from Mr. Warren Buffet “Always be fearful when everyone is greedy, and be greedy when everyone is fearful”. It means to be successful in penny trade, always buy when everyone is selling and sell when everyone is buying. It is very easy to say but difficult to implement as it is not easy to catch the falling knife. But money is always made when you do something different of out of the box.
- Buy the Stock when it is Dump: There are always phases of good and bad in every business and no company is isolated from it. Successful traders or investors always buy the stock when their business is at dump. Most of the small investors sell their holding at adverse time in panic but whereas smart trader always accumulate at lower levels. Buying at adverse time and holding it patiently till the business cycle reverses to its good time. This strategy helps making healthy profits.
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