The usual question I get when people find out I trade penny stocks is “so what are the best penny stocks to buy?”

This is usually followed by the old ‘war stories’ of how they could have done this or they could have done that, and if they did they would have made a gazillion dollars in 5 minutes. Then they’ll go on about how an analyst was wrong with his pick, or that a trading system they invested in doesn’t work.

Balderdash!

The problem for these guys (and gals) is not that the system they’re following doesn’t work, their problems is that they don’t know how to trade. Even if the best penny stocks to buy was laid out in front of them, they still wouldn’t be able to tell because they just don’t know how to trade properly.

Knowing the best penny stocks to buy without knowing how to trade it is like driving a Ferrari without knowing how to drive it. And that my friend is a dangerous game.

If you’re getting that queezy feeling in your stomach like “dude, you’re talking about me”, don’t fret. All you need are some rules. These are general trading rules that will allow you to take your trading game to another level, and more importantly, when you do come the best penny stocks to buy, you’ll know what to do with them (make money!):

“Plan Your Trade And Trade Your Plan”

Just like NFL teams go into a game with a solid game plan, you need to have a plan in place for when you will enter and exit the trade, and how much you are willing to risk on the trade. The best penny stocks to buy aren’t always the best unless you plan to make money with them.

Protect Your Capital

Making profits is important, but it is even more important to preserve your capital when trading. Risk no more than 5% in each trade and you’ll survive long enough to keep trading. For overnight trades, if you’re having trouble going to sleep, that’s a surefire indication that you are risking more than you are comfortable with. Close the position so you can get some sleep.

Meet Your Friend, The Trend

Trading can be quite simple actually; when the market is bullish, you buy, when the market is bearish, you well. It is a lot easier, not to mention much more profitable, to follow the market trend. Don’t go against your friend, that’s just rude.

Trade With No Emotions

Your emotions of greed and fear can have a huge impact on your trading performance. Let them get the better of you and you might not be trading much longer; follow your rules and keep your emotions out of the trades and you might still be trading tomorrow.