The 10 Commandments of Trading Penny Stocks

Yesterday, I brought you our first-ever issue of Penny Hawk.

In it, I introduced you to the Grayscale Ethereum Trust (OTCMKTS:ETHE) – a way to play Ethereum, the second-largest cryptocurrency, on the OTC.

I even issued a recommendation on the stock. It hasn’t filled yet, but once it does, you can track its performance right here in the Penny Hawk portfolio.

I’m going to send you a new stock recommendation every week – for free. And every one will come straight from our constantly-updated Breakout Watchlist.

But before you dive head-first into the OTC market, you have to check out my 10 Commandments of Trading Penny Stocks.

See, the stocks we’re talking about here in Penny Hawk aren’t like Apple, or GE, or Exxon.

They aren’t like any of the major stocks on the NYSE or the Nasdaq, in fact.

These are low-dollar names that make big-money moves. I’m talking shifts of 100%, 200%, 300% in a matter of days.

That means they’re more profitable, sure. But it also means they can be more risky.

But not if you know how to play them. And that’s why it’s absolutely critical for you to read my 10 Commandments of Trading Penny Stocks.

Commandment #1: Set Entry and Exit Rules

Discipline is paramount when it comes to trading penny stocks. These names move a lot faster than your typical New York Stock Exchange ones.

On large-cap stocks like Nvidia, Apple, and Alibaba – there’s a lot of news every week. There are things you can see coming down the road, be they announcements, earnings reports, or analyst calls.

With more information, there are slower moves. Nvidia isn’t going to move 70% in a single day. It has the law of big numbers working against it.

And slower moves = Less emotion for traders.

On the flip side, when you take virtually unknown penny stocks, there’s a lot less info. You won’t see an earnings report or an analyst call blasted on CNBC headlines about one of these OTC names.

And with less information, there are faster moves. Penny stocks have the law of small numbers working against them. And with that comes more emotion.

Emotions and investing are inseparable, especially when you’re trading penny stocks and watching your money rise and fall at a much faster pace. If you want to maximize your profit potential, then you have to train yourself to manage them together. The heat of the moment can lead to mistakes if you don’t have a predetermined plan.

That’s why it’s incredibly important to set entry and exit prices before a trade is opened. And stick to them.

How? Well, to start, we’ll use stop-limit orders to enter Penny Hawk trades. That means we won’t buy a stock until it reaches a specified price – and we’ll never pay too much.

We’ll set tight trailing stops as a way to minimize losses and guarantee gains.

And we’ll do it all to ensure we keep emotion out of it – and money in it.

Think about it. Your investment is climbing up higher and higher. You told yourself you’d get out at 100%, but you want more – and you abandon your exit strategy right before the stock tanks, putting you right back where you started.

That’s exactly what we’re trying to avoid.

500%, 700%, 1,000% – they’re all attainable profits with penny stocks. But you can’t go into a trade trying to make 1,000%. That’s like putting $500 down on green in a game of roulette – and we aren’t risking our money like that.

We’re targeting specific, consistent gains. And we’re doing it with specific entry and exit rules.

How to Get the Rest

That’s just one of my 10 trading commandments. And before you add any of my recommendations to your portfolio, I suggest checking the rest of them out.

Just click here to access your free report. All you have to do is enter your email and phone number, and you’ll be taken directly to the remaining nine commandments.

Plus, you’ll be signed up for Penny Hawktext alerts – which is the best way to ensure you’ll never miss a new trade rec.

Speaking of trade recs – your next one is coming next week. Keep a close eye on your inbox – and, if you’ve signed up for text alerts, your phone!

Have a great weekend,

Chris Johnson
Penny Hawk


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