Penny Stock – How to Avoid Losing My Shirt?
Ok, so as a new investor I made the typical big mistake of investing in a penny stock on the OTC market. I had bought a couple hundred dollars of the stock a few weeks back (.18 cents) and at some point it had gone up but I decided to hold it. Then two days ago the stock fell to just above it’s all time low of .10 cents. The stock had been performing consistently above the low for awhile and the news was good so I decided to buy more. A lot more. More than I can afford to lose. Now the last two days the stock has fallen 20% below what I bought at even though all the news reports on the company are good! I don’t know why it is falling and I can’t sell what I have. What are my options? Can I sell even at 50% of the current price? How can I find buyers? Or am I screwed??
Well I’m not going to disclose the ticker for obvious reasons (Ask me after I’ve sold). But my question is whether I should keep lowering my sell price until it sells?How can I recover as much as my money as possible?
You don’t mention the daily average volume in your question. That would help in assisting you in getting out. It may pay to put small amounts out for sale as a “limit” order. the bottom line is…. money management is the key to any investing… but it’s most important with penney stocks. The bottom line is you have to take a loss because it can get worse. It may reverse the day after you’ve sold it… but you really have no choice.
I trade every day. I never buy stocks below $1. I rarely buy stocks below $3. I have this rule because I understand how they work.
When I first started investing I was also attracted to cheap “Story Stocks”…. another lesson…. they all have a compelling story which almost says….. you have to be an idiot not to buy me. The truth is…
professionals steal money from traders like you everyday…. every hour.
This was an expensive lesson for you. Learn from it. Experianced traders don’t get into positions without knowing their risk first. They’ll generally limit the loss to 1% – 2% of the account value in any one trade using a hard stop. Position sizing is very important. Never get into a stock hoping for a “home run”. The real winners in this game win by singles & doubles. We may average up…. but we never average down”.
If I can be of further assistance. Let me know.