Biggest Mistakes Penny Stock Traders Make

Biggest Mistakes Penny Stock Traders Make

While these recent surges may have been exciting for many, the reality is trading penny stocks is not meant to be this easy. The vast majority of traders lose money.  Here is a list of mistakes penny stock traders make that lose them money.

1.  Assuming a GameStop Surge Will Happen Again

GameStop’s surge will likely prove to be a once-in-a-lifetime occurrence as it was brought on by a perfect storm of events. First, GameStop’s short interest rose above 100% and even experienced and veteran traders weren’t aware this was possible.

2.  Penny Stocks are Risky by Default

Penny stocks are cheap for one of two main reasons. Shares of a company trade at such a low price because investor demand for the stock or consumer appetite for their products are extremely low, maybe even nonexistent.

3.  Not Having a Trading Plan

Buying and selling penny stocks is fairly cheap, so new traders enter the industry unprepared and without a proper strategy. Trading penny stocks requires many different skill sets, including understanding advanced technical analysis techniques & etc.

4.  Lack of Confidence

New penny stock traders who fully understand the risks involved in trading penny stocks often lack the necessary confidence to trade. This isn’t necessarily a bad thing, but it is a mistake.

5.  Having the Wrong Mentality

Expert penny stock traders attribute a major part of their success to having the right mindset. Trading will at times become stressful, and there will be days where it seems nothing is going right. The ability to take a loss on a trade gone bad is a lot more difficult than it seems.

6.  Getting Trapped in the Hype

YouTube isn’t the only home to deceptive practices meant to convince penny stock traders they have an easy path towards success. New-age brokerage platforms are just as guilty of minimizing potential risks associated with penny stock trading.

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