Are You Cut Out For Trading Penny Stocks?

Not everyone is cut out to be a trader. The main reason I say this is because the most difficult part of becoming a successful at trading is that you have to learn to take complete control of your emotions. Some people are very disciplined and can learn to do this fairly easily, whereas most people lack discipline and these people have a much lower chance of succeeding. The latter group are also usually lazy who are not willing to put in the time and effort that is required to stay in the trading game long enough to get over the learning curve.

People who are extremely risk averse usually struggle with learning to trade because they either want to cut off a trade the second it goes against them, or they are afraid to take a loss and get paralyzed by fear. Cutting off a trade too early results in you getting chopped up by “market noise” which has been put in place to scare you out of your money by the trading machines. Being too fearful to press the trigger and enter the market, will also cause a person to miss trades and inevitably lead to their demise, because the big home run trades are how traders grow their accounts to the tune of 100-300% per year!

At the other end of the spectrum, people that like to go to casino’s and get a rush from gambling, are also more likely to fail because they are eager to take on too much risk too early. If you have an all or nothing mentality and are in the trading game to hit a home run every time  and get rich quick, you are misinformed and will suffer some serious pain. Luckily when i started out in trading I was somewhere in the middle which is exactly what  I needed to learn to trade.

Trading successfully requires more than finding a system which defines when you buy and sell and how much of your trading capital you risk on each trade. While this is certainly important since you could go years spinning your wheels without this, you can have a very profitable trading system, but without understanding the emotional aspects of trading, you will never make it. The only way you will be able to tell if you are cut out for trading is get a few notches under your belt in the “emotional capital” department. I am referring to getting started and actually trading with real money. While paper trading certainly is something that every new trader needs to spend some time on, it is not going to help a person grasp the emotional side of trading. None the less, before a person should worry about this, they must first understand the structure of the market and how traders operate. To do this requires studying what is going on behind the scenes, and then practicing on a simulator and getting comfortable with a trading system and trading plan.

The fact is if you can’t make money trading stocks while paper trading when emotions are taken out of the equation, you certainly are not going to make money when you start to trade with real money. So if you are anxious to get involved in trading I highly advise you to rethink the situation. First you should educate yourself for at least several months until you are comfortable you have a solid grasp of how the penny stock market works, and only then should get involved trading with real money…

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