Are You A Swinger or Scalper?

There are multiple strategies for investing in penny stocks. Fortunately, many of the traditional investing and trading tactics can be applied to low priced, penny stocks. It doesn’t matter if you are purchasing one of the top 1000 penny stocks or even investing in all of the top 10 penny stocks, the strategies remain the same.

The key to success is understanding what penny stock strategy to use at what time.

If the penny stock trader uses the right strategy at the right time, it’s possible to make money even on penny stock dogs. The secret here is to understand that every stock has potential to be profitable and it all depends on using the right strategy at the right time.

Let’s take a look at the primary strategies penny stock traders use:

1. Scalping:
Scalping is entering and exiting a position within a very short period of time. It can be so fast that the buys and sells are nearly simultaneous. This method works wonders on every penny stock that is moving rapidly, either higher or lower on the day. It’s critical to remember that you need to have at least $25,000 in your account so your broker will not shut you down due to the pattern day trader rule.

Scalping makes sense when the stock is about to or is in the midst of a sharp, news driven move. Many times these rocket type stocks quickly fall back in hours or even minutes. Therefore, buying and selling very quickly is the only way to safely lock in profits.

2. Long Term Trading
Long term trading AKA swing trading penny stocks is when you hold the shares for anytime over one trading session. Long term trading works best for penny stocks that are slowly climbing higher and it takes more than one day to reach their full potential.

SOURCE: http://tradingtips.com/daily/penny-stocks/swinger-scalper/