Some Psychological Tricks For Better Penny Stock Trading
The recent volatility in the stock markets has led to many new investors deciding to try their hand at trading penny stocks. Penny stock prices have shot up recently, from less than $5 per share, to over one dollar. With so many traders still unfamiliar with this type of trading, there are some strategies and ideas that are being shared to help people become more successful in their endeavors.
One of the most important things that have helped the penny stock prices shoot up is the fact that there is no longer any large consolidation of real-time trade data available to the public. For a long time, the only real-time data available to day traders was daily data and included many small-scale trade setups, not something anyone could rely on as being up to date and fresh. As more investors have become more educated about trading micro cap stocks, day trading professionals have had to change their methodology slightly in order to be able to offer the public real-time information. This is now being done by professional day traders, who have come up with more complex strategies in order to make the most of the low volume and increased speed of trading on the exchanges.
New strategies have been developed to pick out the best trades. One of these is a stock scanner. A stock scanner is an essential tool for day traders, especially those that need to be up on penny stock prices in order to make more money. A stock scanner analyzes real-time quotes from the major exchanges such as the NYSE, NASDAQ, and others. With this information, the scanner can tell when is it a good time to buy and sell, what price to pay, and when is the best time to just hold the stock.
Another thing that has helped the penny stock prices climb is the use of technical analysis. There are several technical analysis tools that help in this endeavor. The most popular among them is the candlestick chart patterns tool. Candlestick chart patterns are actually very good indicators of future market direction and trend movements. With the use of these patterns, people can predict what will be the direction of the price movement.
Other technical indicators that are used by many penny stock investors include the volume indicators and the momentum indicators. Volume indicators are great for getting a general sense of the trading volume over the last few trading sessions. With this information, the trader can estimate how profitable the stocks really are. Meanwhile, the momentum indicator measures the change in price during a certain period of time.
Most traders also use the relative strength index, the moving average convergence/Divergence, and the oscillators in their technical analysis tools. The relative strength index or the ACI helps in deciding which direction the price movements are going to go. The moving average Convergence/Divergence tells what the average price of the stock is expected to be over a given period of time while the oscillators tell us about the stock’s potential to increase or decrease. These technical analysis tools can be really useful for all penny stock investors so they can make more money from trading penny stocks.