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Pick Up Pennies To Build Your Account

May 25, 2011 by   Filed under Trade Like A Pro

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 Pick Up Pennies To Build Your Account

Human nature urges us to want more, more, more. It almost doesn’t matter what it is but it doesn’t matter. It isn’t enough. We need more.

Nowhere is this truer than when it comes to investing in penny stocks.

Most traders hold on to stocks too long. They are afraid they will sell to early and the price will keep going higher and higher and they will miss the big winner.

This mentality has costs traders trillions and trillions in lost profits over time.

One of the most common emails we get goes something like this, I bought XYZ at 10 cents a month ago, it is down to 5 cents now, do you think it could ever come back?

Well when we look back at XYZ we see that the stock went from 10 cents to 20 cents for a 100% price gain and then sold off down to 5 cents.

This trader did not follow the trading strategies very well at all. They made a couple errors that many rookie traders make.

- They did not book their profits when in a position to do so.
- They did not use a trailing stop to protect their gains.
- And they did not use a stop loss order to take them out after the stock came back down.

All we can do at this point is send out a link to the trading strategies and wonder why people do not follow the strategies that we lay out.

In reality we know why this trader probably didn’t sell when the stock was up 100%. They got greedy and thought that this was going to be the big winner and decided to hang on and see. Oops !!!

Greed will be the death of your trading account. Great traders learn to leave their ego at the door. Who cares if you missed a huge winner because you sold it for a 10% or 20% profit. If you did sell it the money would already be in the bank and not still at risk.

Let me show you how pennies turn into dollars.

To illustrate the point, lets say you started with $1,000 dollars. A 5% gain would mean that you were booking profits of 5 cents on each dollar. That would be picking up pennies right? Each week you invest the original $1,000 dollars and the profits into the next stock. ***

Week 1 you would have $1050.
Week 2 you would have $1102
Week 3 you would have $1157.

What do you think the value of the account would be at the end of one year?

$3,000,? $4,000,? $5,000 ?

The answer is over $12,000. Dollars.

I know that sounds crazy but it is true. Learn how to pick up those pennies and you will be on your way to a nice big trading account. Leave the stories about how you made a huge profit on a penny stock for the other guys. In the end they will go broke trying to make that story come true while you are quietly stashing your profits away.

Good Trading

*** We know it is impossible to hit 52 winners in a row for 5%, that isn’t the point. The point is that pennies add up.

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