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Online Trading Tips

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While penny stock trading effectively, it’s very important that one be familiar with the basic use of stop losses. Stop losses are positions you place before a trade that exit a trade at a loss for you if the asset starts to move in a negative direction. This makes it a great way out of a trade should things start to get ugly in the markets. So how does one master these?

During penny stock trading, technical analysis can be a bit frustrating since volume is so low. Regardless, I still recommend adjusting your stop loss to keep your trade in line with support of the stock that has recently formed. Trading like this works for a long trade; short positions should be placed in the opposite manner. Put the stop loss by this most recent area where support has formed below it by one average true range.

What is average true range and why should it be used in penny stock trading? Average true range represents the mean average of movement for a particular security in a specific frame of time. So if you are looking at a stock where each bar equals a day, the average true range is the average movement within one day.

Set your stop loss one average true range below the most recent pivot point. As the stock rises, keep your stop loss adjusted with the price of the underlying asset and follow the asset alongside it as it moves. This is called a trailing stop, and some brokers can even program this feature in as you trade. It’s an excellent way to you are locked in a safe position as the stock continues upwards in a rally.

When it comes down to it, trading micro cap stocks is really no easy goal. In order to reduce or eliminate risk, you need to keep your stop loss tightly trailed to your stock. Taking these tips in mind with you, the chance of losing money is a lot lower. This makes profit a more realistic challenge. Take these tips to the market and reap some solid profits in the market right now!

How’s your portfolio doing? Are you making the money you want in penny stocks? Want some hints to get you moving? You’ll see a lot of great penny stock trading secrets for real profits! I’ll give you the best advice you can get. Be sure to check out what penny stocks to watch this month for serious profits!

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