How Can You Make $100 A Day Investing Small Caps?
You can make a lot of money trading penny stocks if you can see the big picture and pay attention to the small details. You can easily make a lot of money trading penny stocks if you can see the big picture and pay attention to the small details. Its easier said than done however! Lets have a peek at how to do this.
There are many varied methods of investing in stocks, that said, momentum trading is the quickest way to increase your portfolio, and if you trade with the trend, can be the most effective way of trading micro caps. You have to be prepared to invest without emotion and you have to be ready to make a split second decision. In volatile markets like the markets we’re in right now, you may have to go long in the morning and short in the afternoon. It can happen that fast.
Trading the market is really just a numbers game. Whether your 500 shares of a $10 stock move to $11, or 50 000 shares of a $0.10 stock moves to $0.11, its still a 10% move. It depends on how much capital you have. You can trade a $70 ETF’s and can easily make several hundred dollars a day: each and every day. The key is to understand that its a numbers game.
The challenge for trading penny stocks successfully is to understand that there is significant risk investing in small caps. Volume moves stock direction just as much as sentiment. A stock that trades thinly will have significant moves up or down – but will also add risk to your portfolio significantly since you wont be able to get out of a position if the sentiment changes. Try dumping 100 000 shares when the average daily volume is only 50 000. It can be done, but at a cost – and that cost isn’t in your favor.
Its important to have start off with a goal. How much do you want to make? If you are happy making $100 a day, thats $500 a week. It works out to be $25 000 a year. How about $200 a day? Thats over $50 000 a year. Can you do it? Definitely, but you need to know how to do it.
If you want to make $200 a day, you need to position yourself accordingly. What I have done successfully, is to put together a list of penny stocks where the volume is consistently over 200 000 shares a day. I am ideally, looking for something that will have an average true range of at least $0.03 a day for a penny stock, and $3 for a large cap.
When you’re trading penny stocks, you don’t need to hit a home run. You can make a tidy sum of money by simply playing the averages. If a penny stock trades with a 3 cent range, all you need to do is sell it for 1 penny more than you bought it for. Buy 20 000 shares of a $0.10 (a $2000 investment), and set a sell order at $0.11. If it drops below $0.095, get out for a small loss. You can also set a trailing stop loss if the stock is moving above its average true range to take advantage of stronger moves. Follow the trend, and this strategy can make you easy money. Sometimes penny stock picks can be helpful as well.
Of course, trading penny stocks is not without risk. You can very easily lose money, and lose a lot of money. Many traders will often make the fatal mistake of not watching their positions. Penny stocks move quickly – if you’re on the wrong side of the trade, you will lose. Lose often enough and your career will be cut short quickly and painfully.
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