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Penny Stock Investing Rules of Thumb
Understand the market as well as the individual stock. It is absolutely essential to completely understand where you are putting your money. Free penny stock alerts and tips from UniversalPennyStocks.com will help get you there, but you also need to take it upon yourself to do additional research.
Hedging risks is perhaps the most important thing to remember. Never invest all of your allocated investment fund into one stock, such is a recipe for disaster. While big potential gains may seem to loom on the horizon, they are still just educated guesses. Penny stocks are known to fluctuate dramatically in price. Invest wisely by spreading out your investment fund between several different stocks.
Another important rule of thumb is to accept losses. Don’t get caught up in a loss; accept it and move on. One way to do this is to set mental limits for potential losses and let them go when they reach that point.
Use the ⅓ rule. This simple rule means that when you’re riding a wave, take ⅓ off the top and continue to watch the stock from there. This can apply to both gains and losses.
Do not chase a stock that has already had a big pop. You are not likely to win big if a stock has already soared. It is better to hold out and wait for the next wave. A free penny stock newsletter will help you select the right penny stocks to invest in.
Finally, penny stock investors need to remember that, no matter how great the stock is doing at present, penny stocks are still penny stocks and are inherently volatile by nature. When you’ve made a positive gain, do not get greedy. Otherwise, you risk losing it all and starting from scratch again. Know when it’s time to sell. The right broker will help you with this.
