Sometimes it seems like everybody and their brother wants to give you penny stock advice. But there’s really only one type of person you should take advice from, and that’s someone that knows what they’re doing.
The basic fact of the matter is that there aren’t too many penny stock gurus out there. Most people don’t know what it means to “trade penny stocks” other than the stocks are very low in price. That’s why you have to take what you hear about penny stocks with a grain of salt.
Know Your Sources
Be sure you have a pretty solid idea of the person’s background before taking their advice. They should be actively trading and earning a bulk of their income from their trading success. You don’t want someone that just deals in theories and doesn’t test them out in the real world.
You may actually have to pay for the advice you receive on penny stocks because if the tips and strategies that someone is giving you really worked why would they tell you about it for free? Paying for advice can turn out to be one of the best things you do if that advice end up making you hundreds or thousands of dollars.
Get Multiple Opinions
Taking advice from just one person can work, but often you’ll want to run an idea past someone else to see if they think it’s valid. However, if you hear a good idea don’t let a naysayer stop you from putting it into practice. Sometimes success takes outside-the-box thinking that will sound strange to the uninitiated.
Do Your Homework
After you get a piece of advice you need to validate it by doing your own research to see if it’s feasible for you. Putting your success or failure completely in the hands of someone else is never a good idea. By taking the time to dig deeper you’ll avoid plenty of bad advice and uncover some real gems.
Before you start putting any new advice to use, make sure you practice the concepts with a stock simulator. This will help you field test the idea to see if it has merit long before you put your hard-earned cash into it. Once you have practiced to the point where you can see that it’s working you can switch to real money and take in the profits.
Trust Your Gut
It’s okay to ask for advice, but at the end of the day you know yourself best. What is your gut telling you? If you don’t feel good about a trade or a strategy, then don’t do it. Just be very clear that it’s not fear that’s causing the unease, but rather a bad feeling telling you you shouldn’t do it.
Always assume that the penny stock advice you get is bad advice until you’ve vetted the source and tested out the strategy. Only when you are satisfied that it works should you consider it good advice and give it the green light.