1) You can make 20% in one day trading penny stocks—rather than making that in one year with a blue chip stock(In a very good bull market)

2) Finding a stock that can go from $10 to $100 is hard, but finding a penny stock that goes from .10 to $3 is easier.

3) You want to make money as fast as possible (trading safely of course).

4) You have a small account (Under $10,000)..penny stocks are best to trade with small accounts because of the percentages you can gain.

5) You trade with $1,000 dollars, at this point, it’s essential that you ONLY trade penny stocks as it is the only way you’re going to increase your capital in a fast, yet feasible manner.

6) You love trading volatile stocks and their price swings – penny stocks are for you!

7) No professionals trade penny stocks, so no one has the upper hand down here in penny stock land.

Penny stocks are easy to predict and pattern, partly because of #7.

9) You prefer stocks that don’t trade pre-market or after hours. Penny stocks don’t have after hours trading!

10) If you’re a speculative type of trader.

11) If you love excitement

12) If you like the idea of high risk/high reward.

13) All you need is a discount brokerage no big-time brokerage where you have to call in orders and where they charge you $30 commission every time you trade. I use and recommend SogoTrade

14) If you like the idea of buying a penny stock at .005 and selling it at .10

15) You like to short sell, cause there’s nothing like short selling a huge spike in a scam company (which is what most penny stocks are)

16) Yes! You can short sell penny stocks!

17) You like stocks that don’t exactly follow the trend of the whole market (economy, market conditions, etc. don’t have as much of effect on penny stocks).

18) If you’re risk tolerance is high. Yes, these penny stocks are risky but well worth it if you know what you’re doing.

19) If you’re unsatisfied with your current holdings in the market

20) If you like the idea of trading(holding 1 day – 8-10 months) rather than investing (hold a year or longer).

If you have other reasons that you’d like to share feel free to add them in a comment and I’ll post them.

You Listen To Others & Not Yourself

Not making your own decisions is costly in trading. Sure you can listen to what someone has to say about certain stocks but when it comes down to making a trade it is ultimately YOU who needs to make the decision. Other individuals are often times unreliable and irrational. Listen to yourself and make sure you’re comfortable with your own choices.

You’re Not Prepared

The night before or in the morning of the next trading day have your watchlist put together and ready. Know your specific price points you’re going to buy or short at. I know it sounds crazy, but you shoud visualize the trades and plan your trades when they reach certain points. This will make it that much easier when all hell breaks loose at the opening bell @ 9:30 a.m.

For you Thinkorswimmers: Those people shorting penny stocks with the brokerage Thinkorswim better be prepared first thing in the morning (7am eastern) to reserve those shares in those hard to borrow penny stocks. If not you might not have any shares to short on that day.

You Don’t Have A Strategy

If you’re one of those wreckless traders who just sees a stock going up and says “that looks good because it’s going up, i’ll just buy it here” – then I’ll feel really sorry for you then……and later when you don’t have any money left in your account. Come up with a simple strategy so you’re not blindly throwing money around. For me, it’s simple – I only buy breakouts and short pump and dumps. Come up with yours today!

You Don’t Understand The Market

Most people don’t realize what aspects of the market affect your selected stock. Any press release, world, or economic news can take your stock down in an instant. There’s nothing you can do about it but every trader needs to be aware of what can happen. Down here in penny stock land hype and manipulation control most of the price action in these particular stocks, and is part of the reason why it’s so simple to profit down here in the “gutter”. On the flip side, you need to understand what happens during hype and manipulation and what it does to penny stocks to actually reap these easy profits.

You Don’t Have The Right Tools

If you’ve read my eBook, You know I’m a huge believer in having the right tools to trade with. For me, I have the perfect brokerage, different scans, stock charts, quotes, etc. It’s important that you have whatever tools are necessary for your trading niche. For some day traders that means having L2 quotes, for others it means having a chart with 5 min time intervals. Simply put if you dont have the needed tools, you’re trading will suffer.

So you’re new to trading penny stocks? Don’t worry because after you read the following tips you’ll have a huge foundation to build on!

Get A Quality Brokerage

It’s important to get a good quality discount brokerage with low commissions to do your penny stock trading with especially if you have a smaller account size as commissions can do some damage. I use and reccomend Sogotrade – Only 3 Dollars a Trade.

Throw Away The High Expectations

Don’t have high expectations – you’re a beginner so don’t expect huge % gains to come quickly and right off the bat. If you have high expectations when you start down here in pennystock land you’re just affecting yourself and your trading negatively. With high expectations comes pressure to perform, and as a penny stock trader you don’t need to deal with unneeded pressure.

Start Small

You should start trading with small positions. As a newbie, don’t put all your eggs into one basket. Spread you money around in different stocks so you’re cutting your risk especially in your beginning stages. As you grow more comfortable trading penny stocks you can increase position size in a specific stock to the point where you’re trading two, three, maybe even one stock (I wouldn’t recommend this) with you’re whole account.

Do Your Own Homework

Don’t buy a penny stock just because it’s was posted on a message board or in a chat room. Do your own research and due diligence – I promise you’ll trade better because you’re comfortable with your own decisions plus it’s more gratifying to profit from a stock that you uncovered and researched yourself.

Get a Mentor

Find a mentor or educator and follow his site. I remember when I first started I was always just trying to find inspiration and to know that I can succeed and profit from trading penny stocks. So it’s very important and I’m sure you think the same, to find a website/mentor that can give you inspiration and education.

Don’t Be Greedy

This tip builds off tip #2 – don’t be greedy! I can’t tell you how bad traders mess up when they just want more and more. What usually happens is that end up earning less profit or watch a profit turn to a loss.

Don’t Get Over Confident

Don’t get over confident, if you’ve made a great winning trade congratulate yourself (cause you deserve it) and move on to the next stock. Don’t feel like you’re invinsible, because well, you aren’t. You’re just as much likely to loose all you gained in that winning trade in your next trade if you trade with a cocky attitude. Trade intelligently!

Trade Instead Of Invest

“But I want to invest in a penny stock @ $.01 and sell when it goes to $1.00″ – it’s rarely the case that a penny stock can make you a lot of money if you invest with it long term. Very few of these penny stocks are actually legit companies therefore most will never go up in the long-term. What most penny stock traders do is trade the hottest, volatile, volume-heavy penny stocks each day holding them for the short-term.

Short Selling

You can make money when penny stocks go down, too! It’s called short selling and while it’s not exactly for a newbie, if you’re up for it you should definitely try it out. If you think a penny stock is going to go down, you short it, and make money when it goes down. It’s that simple. Get my FREE ebook at pennystocker.com to learn how to do it.

Stay Tuned

Keep up to date with my site for daily hot penny stocks to watch & make sure to follow every tip to insure your success in penny stock trading.

I have just finished compiling a very unique one-of-a-kind educational penny stock ebook called The Ultimate Guide: Short Selling Penny Stocks. The reason I created this FREE eBook was really pretty simple. Looking around on the internet it was clear that there was barely any educational sources available for short selling penny stocks besides Timothy Sykes, who has a wonderful collection of DVD’s that can transform anyone into an amazing pennystocker. Tim has this penny stock niche on lock-down. Besides him no one else offers much education in the short selling of penny stocks niche. That is when I decided to write my own educational eBook that has most of what you need to know to profit consistently by trading penny stocks.

Not only did I decide to offer education, but I decided to offer it for FREE. Free education is hard to come by these days especially education for penny stocks. The blog started as a place where my eBook would be available to download at.

Here is why you need my eBook.

- If you’re a little skeptical about short selling such small stocks.

- If you want to trade the most predictable patterns in the market. Predictable patterns = consistant profits.

- If you’re wanting a complete guide on how to short sell penny stocks.

- If you’ve hit a skid in your trading and need a little more inspiration.

- If you love detailed stock charts.

- If you like to make money in a bear market.

- It’s FREE.

You can download the FREE eBook above this post.