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Penny Stocks can rise very quickly
but they can also fall quickly too. The reason that most investors hold
onto a stock is because the fail to separate their emotions from their
actions.
All of your penny stocks buying and selling should, of course, be based on
sound research both of the market and the companies’ recent history. How
the company is doing in terms of profitability, whether they are just
about to, or have just announced profits, losses or new patents,
discoveries and products, can all affect your decision on whether, or not,
to buy.
Knowing the right time to sell your penny stocks however can sometimes
seem, as much an art as a science, although getting it wrong can be fatal.
Many people seem to put all their research efforts into knowing what penny
stocks to buy and when to buy them.
Investors seem to forget about researching to sell stocks. Instead, they
let their emotions take control and sell at the wrong time. Investors
selling at the “wrong time” fall into two categories. These categories
are, The Runners and The Sitters.
The Runners like to take profit way too early. They see their Penny Stocks
rise a little and sell because they don’t want to “risk too much”.
I’ve seen it time and time again; these people set out to earn a 25%
Return on Investment and end up taking profit at 1%. Someone who takes
profit twice at 25% earns a lot more than someone who takes profit twice
at 1%. Usually, as soon as they sell a penny stock, it will rise even
further and they’ll be wondering why they sold so early.
The Sitters are the heavily emotionally involved in their penny stocks.
They are gamblers at heart and just do not want to let go of a losing
position because “it could bounce back any day now”. When they do let
go of their Penny Stocks - there is virtually nothing left. The sitters
like to sit on a losing position. They like buying but dislike selling.
Do you want to be a Runner or a Sitter? Well, I hope you are neither. You want to be a winner. A winner will separate their emotions from their
investment thinking and will also research when buying and also when
selling. They will buy and they are not afraid of selling.
There is great deal of profit to be made from trading in Penny Stocks. But
you have to know not only what to buy but also how long to keep it and
when the best time to sell. The answer, as with most things in the world
of finance, is good information and research. But that doesn’t end when
you buy. Find out why your penny stocks are rising and this will put you
in a much better position to know when to sell.
By:
Sam
Chim
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