Intraday trading is a form of trading in which position is squared off the very same trading day i.e traders do not hold their position for more then one trade day. Traders with good market knowledge and trading skills generally prefer to trade on day basis as it is a risky form of trading. Intraday tips of experts are often considered while trading to manage risk and returns in a better way. Day trading can also be done with penny stocks. Stocks belonging to companies with very less market share are known as penny stocks, they are not like other securities here price movements can be quite volatile. These stocks are also known as OTCs(over the counters). More number of traders are attracted towards it because its prices are really low. Trading in penny stocks on intraday basis requires a methodological approach to locate best opportunities in market.
Few tips to earn more profitable returns while day trading in penny stocks are discussed below:
1) Know your risk
Trading in penny stocks can be risky, before you start trading in them make sure you aware of the risk and plan your trades according to your risk bearing capability. These stocks are of exceptionally volatile nature. Keep a realistic perspective here because what goes up will come down also at later stage.
2) Plan more number of trades
Waiting for high profit in single trade is not recommendable while day trading. Instead try and plan more number of trades and earn profit from multiple trades. Also select stocks belonging to different industries. It will help in diversifying the risk of your portfolio.
3) Do not buy stocks at high price
Penny stocks are believed to be garbage and this is the reason why they are priced low. It is difficult to find buyers for them also sometimes. In stock message board you may find various people explaining why stock is good. But never go for buying such stocks if they available at high price .
4) Use proper support and resistance levels
Before beginning to day trade in penny stocks identify the key support and resistance levels. This will help you in understanding risk and reward for the particular trade. By having a good knowledge of such levels you can choose a better position where you can control risk in a better way.
There are always ample opportunities present in market. Traders must plan a wise trading strategy according to the market needs to make efficient use of opportunities offered by market. Financial advisory services like commodity tips, free intraday tips and more can also be used for improving your returns. Day trading helps in earning quick returns but have realistic assumptions here and never follow wrong trading practices in lust of earning high returns.