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I don’t have a complete understanding of trading. It seems to me this is purely dependent on a stroke of luck and that comes by calculating your steps to possibly hit that luck waiting for you. Could it be true that whatever calculation you make for a game of chance are just calculations but they are not a sure hit to success?
There is no guarantee of success on any particular trade. That’s why going “all in” on one trade is a bad idea – it can knock traders out of the game for good. Successful traders realize that there will be losing trades along the way, and there’s nothing wrong with that. Protecting your downside is critical to capital preservation. Overall, it’s about pinpointing a strategy with an edge. Finding a pattern/indicator that generates a particular result more often than not. If a trader capitalizes on those opportunities over time with proper risk management and profit taking, the numbers will ultimately work out in their favor. In the end, it’s not about finding sure winners or never losing on trades, it’s about having an edge that puts the odds in your favor, much like how a casino operates.
Jeff’s advice is on point. It is now up to me if I am disciplined enough to follow. I am going to play it safe by educating myself as much as I can for now. There will be many trading and investment opportunities for me in the future. Will share these lessons to all my friends.
I wish I’d had this article when I started doing some trading. I made the first mistake you’ve outlined about not protecting my capital – I’d bought some stocks and they started to decline. I thought I’d hang on to them and wait until they turned around so that I wouldn’t lose too much. Well, those stocks kept tanking and before I knew it I was left with what was pretty much worthless stock. I should have cut my losses quicker and moved on. I learnt that lesson the hard way, but it was a lesson nonetheless and it’s a mistake I’ll never repeat. I like the idea of aiming for consistent base hits by locking up modest winners – that makes a lot of sense to me. Thanks for these tips.
I believe there is so much to learn from Penny Pro and Jeff Forehand’s success story specifically. The consistency and the discipline of achieving that is worth emulating. The issues for most of us is greed. We want to make a quick buck and that is how we get burned within no time. Jeff is worthy trader who has a lot more wisdom to provide to others on how to turn your “pennies” into tens of thousands to say the least.
Thank you for the very informative post. Recently just took into investing over the past year and the learning curve is huge at the beginning. There is so much information to digest when it comes to learning the market and achieving decent financial gains. I would love to really start diving more into penny stocks and become a trader myself as well.
Wow, how amazing to receive such a great return. I’m such a risk averse person, I don’t know that I’d be able to trade speculatively in penny stocks. I will do some more research, because as you say, you need to educate yourself to be successful. It may be something I would like to do in the future.
I like the excellent point you brought up to get consistent base hits. The numbers seem to add up in your favor as you approach things this way in game, and in real investing. Big gains will come with time as the consistent hits keep coming, managing risk with the occasional loss. Especially with penny stocks.
I started out with penny stocks myself. I wish I read about the principles described above earlier in my career. I may have been a bag holder a few times less.
What resonates more with me is the part about educating oneself such that you move out of the realm of speculation and in to the real of investment.
Wonderful post! My boyfriend started trading penny stocks, and he has found that the best strategies follow the principals shared in your article.
I am especially glad that you mentioned the part about accumulating profit through small gains over a long period of time. I think many people hear penny stocks and think it is some magical witch-craft where all of the sudden you’ll go from $500.00 to $500,000.00 in no time.
Obviously, this isn’t the case, and I think it is so important that people understand this.
Hi Lauren – that’s exactly right. In trading, consistency is one of the best attributes to have. It’s not about getting lucky on one big winning trade – it’s about modest, consistent profits that add up over time. It’s much easier to capture ten 10% wins than one 100% win. And aiming for “home runs” every time is risky. There are many gambling tendencies that can trickle into trading if you’re not careful, so those who choose to trade have to be aware of that. The proper mindset, trade plans, and allocation strategy are all critical to every trader’s success.
Hey Matt Thomas, great article you have here. I myself is trying to learn about the stock market and this was really helpful. Love the transparency and the fact that you laid out some of Jeff Forehand’s “Don’ts” early, thanks for doing so. Also, I was wondering if the limit to invest is $1000 or is that the safest amount to invest with?
Hi Brandon. There’s no limit on how much you can invest – I think you’re asking if $1,000 is the minimum. And if so, it all depends on the broker you choose (Etrade, Scottrade, TradeKing, TD Ameritrade, Robinhood, Fidelity, etc.). Some will require you to deposit at least $500-1,000 in order to open the account, but others will not. In choosing a broker, it’s important to consider minimum deposit requirements, sign-up bonuses, commissions & fees, and various tools/support they provide.
The safest amount to trade/invest with would be $0, but in doing so, you’d never see any returns. A lot of Penny Pro members just starting out opt for a Paper Trading approach until they grow their knowledge-base and confidence, which I think is a great idea. Once they feel comfortable enough with their strategy and mindset, they put their real money portfolios into action. It all starts with education and discipline, and the profits follow from there. Take care!