Some people find penny stock trading quite exciting. However, there are umpteen number of misconceptions as well, attached to this. Let us see some of the trends that have been taking place in the penny stock space.
Fewer Opportunities For Penny Stock Traders
Penny stock trading has been restricted to a large extent and the frauds pertaining to it have come down drastically over the last few years. The volatility has reduced over a longer period of time and most of the volume is dominated by algorithmic trading.
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This reduces the active open opportunities for traders. They have to shift focus from just buying and selling to the research and diligence parts of the process. Since these traders are not working on commissions, finding a good trade is more essential. They prefer to be patient and wait for an opportunity to show up instead of just buying penny stocks just to say they made a trade.
Pre & Post Market Hours Are Important
The actual trading hours might be limited but the real study and research happen before the market opens. Most traders catch up on the trades that have happened overnight and plan their day’s positions accordingly. Many will also make a list of penny stocks to buy.
Overseas news and announcements are key. Also, high-frequency traders work during the open market hours mostly but spend the post-market hours analyzing the good and bad trades of the day. Research plays an important role.
Patience Pays
Traders in a real sense do not take wild chances. They study the probability and go with the daily grind of trading. Most of the days are generally trade worthy and with 250 trading days in a year, discipline plays a huge role.
Most of the time penny stock trading is about following a straight cut path. The decisive days are few far and between where earnings can be very lucrative on trading. Most traders are disciplined and like to analyze their trades in every way before they commit to it.
