Last updated: 27 January 2017
Can one realistically become a millionaire trading penny stocks?
I guess anything is possible, but first we need to define what I mean be penny stocks.
The official definition of penny stocks can be found here. But the penny stocks I’m referring to include penny, micro and small cap stocks, usually under $10 (but I don’t discriminate), and traded on all exchanges including NYSE, NASDAQ, AMEX, Pink Sheets and OTC.
At the end of the day, I don’t really care what the price of stock is. If it’s a good company, a solid investment or trade for which I can make quick gains, I’ll look at it.
It’s pretty far fetch to expect to become wealthy trading hot penny stocks using the methods of Penny Stock Prophet (James Connelly) or Penny Stock Egghead (Nathan Gold). For these strategies are just marketing hype, and complete BS designed to entice naive novice traders to buy their picks.
We’ve all heard mega success stories, are these real?
Who knows, but with a systematic, disciplined approach, one can definitely aspire to become a millionaire investing in awesome penny stocks. How fast largely depends on how active you are and what account size you start with. It can also depend on whether the stock market is bullish or bearish, or neutral.
In a bull market, knowing which penny stocks to watch is critical. Many stocks can skyrocket hundreds, even thousands, of percent within days or weeks. Sheep (i mean investors) pile into stocks with no regard to any fundamental or technical analysis whatsoever. An astute trader who can recognize when to buy and sell, can take advantage of this and ride the momentum higher.
It only takes a few 1,000%+ winners to really kick start your portfolio.
But most times, these kinds of gains are few and far between. Therefore we must focus on capturing solid, regular 20-50% gains, while limiting losses (and you will have losses). Over time, these gains build up, and the more experience and confidence you have in your trading abilities, the better opportunities you will see in the market, and your investment portfolio can really grow fast.
At the end of the day, becoming a penny stock millionaire can be hard work, but is not impossible. Just make sure you follow the rules above, trade small positions while you learn, find a reputable penny stock newsletter that provide a great list of penny stocks (ah hem, Small Cap Momo), and stick with it.