The Primary Keys to Penny Stock Fortunes

Penny stock fortunes come to those who work their butt off. If you're looking for overnight riches, be prepared to be exploited by thousands of unscrupulous brokers, bloggers and penny stock newsletter publishers. In this article I will succinctly describe and isolate the real keys to your penny stock fortunes.

Avoid Micro Cap Fraud

Understand micro cap fraud and avoid it. The most important first lesson is this: penny stocks are speculative in nature and thus very susceptible to being manipulated. Penny stocks often don't have to report with the SEC (Securities and Exchange Commission). The two main forms of micro cap fraud you need to familiarize yourself with are the Pump and Dump and Chop Stocks.

Practice with Paper Trading

If you're impatient about jumping into buying penny stocks and don't want to "waste" time practicing and studying first, I can pretty much guarantee your failure. Like everything else in life, practice makes perfect. You need to learn the ins and outs of the Over-the-Counter market and follow the ebb and flow of a variety of different penny stocks before you risk any of your own money. Paper trading is basically just practice trading without actually investing any money.

Be Willing to Pay Extra for Full-Service Brokers

Some people tell you to jump towards your penny stock fortunes by relying on discount brokers. Yes, there are perfectly legitimate discount brokers who can make it cheaper to execute trades. But when you first start investing, you need the wisdom and support of a full-service broker.

Maybe a couple years down the line you can switch to discount brokers to save money on trades, but I urge you to build a solid foundation of knowledge and discipline in order to obtain your penny stock fortunes. Full-service brokerages are far better suited to help you in this regard.

Build Your Own Penny Stock Fortunes: Never Let Someone Persuade You to Buy Stock

Do your own research and due diligence; never let someone persuade you to buy a stock just because they claim they did their research and all you have to do is buy what they tell you (or what their software tells you). Both the Pump and Dump and the Chop Stock schemes remain effective forms of fraud because so many novices are just plain lazy.

Don't fool yourself: there are literally thousands of people illegally exploiting novice investors just because those novices are too lazy to do their own work. Someone comes along and tells them about "hot penny stock picks" and those lazy novices get suckered into making someone else their penny stock fortunes.

I hope this helps you understand what it takes to succeed with trading penny stocks. It is important that you start right on your path to penny stock fortunes.

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