I have once believed that buying penny stocks, or those stocks that are below 1 peso, can make you an instant rich trader or investor. During my first years of trading, this is what I did—I bought cheap stocks hoping that after some decades, the value will go up but realized after some time that things don’t work that way especially in the stock market. If you really want to get rich, you have to build up your strategy when trading and investing. You have to rule out the idea that you should buy penny stocks. Here are some of the pieces of advice you can consider when dealing with cheap stocks in the market.
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Never use cheap as a reason to buy stocks. Don’t start investing or trading using penny stocks because it’s not an effective strategy to grow your money. Instead, use fundamentals and technicals to support your buying, selling, and holding decisions. Guessing when the value will go up and down can’t get you through the challenges in the market. Speculation is not always the answer. You have to have a solid strategy that you can repeat over and over again no matter what the status of the market is.
There is always an exception to the rule. If you really want to buy cheap stocks, make sure that the company has good stocks that can give you good dividends. Ensure that good performance exist because this is going to be your proof that the stocks are worth it to buy. You have to study the company and create something you can use from throughout your journey as a trader and investor. Don’t put your money in an investment that will not bring you value. Buy valuable stocks and never stop learning from your experience.
The stock market doesn’t always favor penny stocks. This means that there is a slight chance that cheap stocks will go up and usually, they only become valuable when there is concrete evidence that the company is doing well. Cheap stocks will remain at its current value even after a decade. That’s one thing I learned throughout the years of trading. Increasing in value doesn’t happen all the time. Don’t waste your money. Instead, buy real stocks and focus on your trading plan so you can avoid regrets. Remember, cheap stocks will not make you rich. They will only exhaust your money.