Making money with penny stocks is all about having a strategy. And in 2021, that strategy needs to account for all the different factors affecting the stock market right now. For example, while many thought that the pandemic was over, we are now seeing resurgences of cases around the world due to the Delta variant.
While vaccines do work against this, many penny stocks traders are adjusting their strategies thusly. This is a clear example of the fact that your strategy needs to be malleable with the times. And, it is dually important to stay up to date with all the latest news and events occurring right now. Aside from the pandemic, we also have to consider the fears and reality of long-term inflation as a result of Covid itself. This is inevitable and something that many investors are thinking about right now.
On top of this, we also have to factor in the continued volatility of the cryptocurrency market and its effects on the entire list of penny stocks. While crypto does trade similarly to penny stocks due to their corresponding price points, they are different assets. But, there are also plenty of penny stocks that are working either directly on cryptocurrency-related models or with blockchain technology. So while this is not an extensive list, it is something to consider. With that in mind, is making money with penny stocks possible?How to Make Money With Penny Stocks
- Having a Strategy That Aligns With Current Events
- Knowing How to Buy and Sell Penny Stocks
- Using Volatility to Your Advantage
Having a penny stocks trading strategy is something that will always be a major benefit. When it comes to investing in small-caps, a strategy will always be the difference between consistent gains or consistent losses. It’s difficult to pick one methodology with trading as every investor is different.
However, there are some similarities across the board. For one, all strategies should forgo FOMO or the fear of missing out. This is something that amateur traders can quickly see turn against them, and something that has become extremely popular over the past year. With the rise of social media, every investor wants to hop on the latest trends.
FOMO plays out in one main way. Let’s say you see a stock that is shooting up tremendously on a given trading day. This will result in investors wanting to hop on to that trend, to try and get a piece of the winnings. But, by the time you’ve submitted a buy order, it’s likely that the bullish momentum is over and the price will be in a correction stage. This results in sizable losses that can occur every time you get FOMO. So, while this in itself is not necessarily a strategy, it is a principle for every investor to consider.Knowing How to Buy and Sell Penny Stocks
Knowing how to buy and sell penny stocks aligns slightly with having a trading strategy. But, this is something that can be a part of all investor’s portfolios. The first aspect of this is buying penny stocks. To buy a small-cap, investors need to begin with the research stage. This involves asking questions such as, what does the company do? What are its financials like? Is it turning a profit? And what is its long-term outlook? All of these can help to show if a company has either short or long-term value or neither.
With the power of the internet, any trader can be just as informed as the pros. And if you want to make money with penny stocks, information will be your best friend. One tip is to utilize a real-time news feed. This can be an expensive tool but it will be well worth it. As stated before, penny stocks are highly volatile, this means that when news comes out, prices tend to move correlatively. So, understand what’s causing fluctuations, and use it to your advantage.
Selling penny stocks is relatively similar. In order to do so, investors should first set a price target. This should be a realistic price and fall alongside an even more realistic time frame. The best investors have a plan and stick to it. Well, there are more nuances to this, like mentioned earlier, trading is individual, and therefore your strategy will determine your methods.Using Volatility to Your Advantage
Volatility is one of the main reasons that so many investors tend to lean toward penny stocks. It allows for large intraday gains and on the other hand, large intraday losses. But, understanding volatility and how to use it to your advantage will be a great asset to your trading strategy. The main driver behind volatility will always be speculation. Speculation is the main reason that penny stocks move, and this trend continues the more and more that social media has a role in the stock market.
For those unfamiliar, speculation simply means any outside factor that is impacting a stock’s price. This could be a news announcement, a new balance sheet, or even a rumor spread online. But because penny stocks are all under $5, they are highly subject to intraday moves as a result of this.
Using volatility to your advantage can be difficult without the right tools in place. This includes again, having a real-time news source, understanding chart patterns, and spending a great deal of time researching potential market opportunities. And it’s worth noting that volatility can work both ways so understand exactly what you’re getting into. But, because of the vast potential of penny stocks, many investors choose to use this factor to their advantage.7 Penny Stocks to Watch
- Cyren Ltd. (NASDAQ: CYRN)
- Inuvo Inc. (NYSE: INUV)
- 9F Inc. ADR (NASDAQ: JFU)
- Sesen Bio Inc. (NASDAQ: SESN)
- SunLink Health Systems Inc. (NYSE: SYS)
- MMTec Inc. (NASDAQ: MTC)
- SINTX Technologies Inc. (NASDAQ: SINT)
Finding the best penny stocks to watch all comes down to knowing the ins and outs of the market. While this may be a lot to take in, the reality is that investing in penny stocks can be fun and challenging.
Because there are so many different aspects to consider, it’s best to do your research and learn as much as you can before putting any money into the market.
This way, you can be confident in your portfolio and your overall strategy. With so much going on amidst penny stocks right now, understanding how to trade and what to look for will always be your best friend. Considering this what do you think? Are penny stocks worth it?