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How to Trade Penny Stocks for a Living

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How To Trade Penny Stocks

Learning How to Trade Penny Stocks

Many investors are eager to learn how to trade penny stocks. They do not want to wait a lifetime for their investments to mature so that they can enjoy wealth in their old age. Penny stocks offer both amateur and professional traders an opportunity to make significant amounts of money today and every day.

The low price of the average penny stock actually works in its favor. A low price exaggerates the effect of even the smallest fluctuations in value. For example, when a 50-cent stock experiences a 10-cent increase in value, it generates return of 20%. If you had invested $10,000 in that stock, you would have made $2,000 just from that tiny price adjustment. A $100,000 investment in the same stock would have generated $20,000 in profits.  This is the sort of stock price fluctuation that can happen in just a few minutes after you learn how to trade penny stocks.

Tips on How to Trade Penny Stocks

If that scenario encourages you to learn how to trade penny stocks, then keep in mind a few important tips about this practice.

• Most penny stocks are not found on the regular stock exchanges. You must look for them in the over-the-counter (OTC) market.

• The SEC does not provide oversight for these stocks.

• On the major stock exchanges, when you want to sell a stock you can always find a buyer. In the OTC market, you will typically have to make deals directly with a buyer rather than simply sell to a broker.

• After you learn how to trade penny stocks, you will never want to go back to the slow pace of the regular stock markets.

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