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Know the Good Entry Point in Penny Stocks
| Sometimes we spend great deal of time trying to get the best fill on a trade entry, only to see the penny stocks continue to move upward and leave us behind. This gives us the choice of chasing the stock (never a very good idea) or leaving that trade behind and finding better trade elsewhere. The sad part about trading penny stocks is that the hardest trades to enter are the ones you most want to get filled and often those sought-after shares, which other traders also think it is a good trade which makes execution even more difficult at a desired limit price, yet these are the stocks usually you desperately want to own it after you have done much of your homework and is convinced beyond reasonable doubt. If you instead think these stocks have run up too far, and start to chase it or alternatively pick the less desirable stocks and hope that they will eventually catch up, you are more than often likely to be left with poor trades. If you don't fight to get on board the leaders, and instead let the market pick your penny stocks, you may eventually end up with the bad ones. As a result, the most expensive trade for most of us is the trade never done. The impact of these missed trades can be expensive, and failure to execute these trades usually costs more than the squabbling over trying to get in at a specific desirable limit price. If you allow such trades to get away, then you may be leaving a lot of opportunity on the table. One way to do this is to place market orders when you are concerned about missing out on a breakout situation. I usually do not favor such market orders, but a fast moving penny stocks with a lot of volume and explosive uptrend potential should be the exception to this rule. For those active traders who follow the third quarter earnings season should know what I meant. Very good examples are Apple (AAPL) and Google (GOOG) after their earnings release. Bottom Line - Try to think about this in another way. If you think you're saving 10 cents a trade by placing limit orders, and miss a five-point or thirty-three-point mover because of a limit set too tightly, then it will take 50 trades worth 10 cents of savings to make up for this trade not being done. Think about how you currently enter trades and evaluate whether you should make modifications to capture more of these types of trades. We really should not get "penny wise and pound foolish" in our trade entry points. http://www.madpennystocks.com/ |
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