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The Single Most Important Penny Stock Rule

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The One Penny Stock Rule that All Investors Should Follow

Penny Stock Rule

There is certainly more than one penny stock rule. This particular segment of the market is difficult enough, after all, that most traders live and die by a list of rules. Most traders are aware that trading should take place during regular business hours, that one should never invest more than one can afford, or that limit orders are vitally important. The most important rule, however, has less to do with how the market performers and more to do with how traders think. If you want to invest in penny stocks, you must learn to live by this rule.

 The Penny Stock Rule that Causes Trouble

The one penny stock rule that most forget is simple: never get attached. The market is incredibly volatile, and stocks go up and down in value all the time. Some traders stick to a “ninety day rule” while others look for specific cut-offs points for buying or selling, but emotion should always be left at the door. This penny stock rule exists to keep individuals from being attached to a particular stock. It is easy to favor a company for sentimental reasons, or to become attached to a stock that has been a strong performer. Doing this can cloud your judgment, and easily lead to major losses. Choosing to trade logically rather than emotionally is the only way to keep your head above water when you begin to trade.

If you spend more time trading in penny stocks, you will find it easier to avoid emotional mistakes. All your decisions should be purely financial, and should avoid emotion whenever possible. If you are willing to follow that one simple penny stock rule, you should be able to make the trades necessary to make money in the market.

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