Day Trading Penny Stocks - Do You Have What It Takes? 

Arguably, the most effective way to make good profits on a daily basis is through day trading penny stocks. You are able to build wealth in a way that can be tracked daily and in small increments that adds up in the long run. Still, we always warn our readers that day trading in microcap shares is not for the lazy, the ignorant and the brash.

Day trading is simply the usual trading of stocks like penny shares on an hourly, daily or weekly basis with the goal of capitalizing on the short-term fluctuations that happen in the market. In contrast, the term investing is usually applied to the investment of money on stocks on a long-term basis, which may be anywhere from a year to a quarter-century.

Day trading penny stocks has its pros and cons. On the bright side, you can make several hundred percent profits over your initial capital investment from one year to the next. Your profits will come in small increments of anywhere from 5 to 10 percent per trading transaction. Keep in mind that small gains made more frequently will more likely be greater than large gains made less often.

On the darker side, you can either suffer from losses or let your money sit by idly. These scenarios usually happen when you purchase penny shares and these drop in value within a few days.

You can wait for the next available opportunity to make a profit but your money is not earning a single cent in the meantime. You may also take a quick loss by selling the stocks at a lower price but a part of your money is available for other purposes. In both instances of day trading penny stocks, you are at the risk of substantial losses.

Your next concern will then be applying the right steps to gain several hundred percent profits in small increments, thus, avoiding possible substantial losses. Yes, there are effective day trading strategies but before you even study these strategies, you must make sure that you are suited for the job as a day trader in penny stocks.

You must possess the personal qualities of patience, vigilance and diligence while day trading penny stocks. Patience is required to wait for the target price to come into play. Vigilance is essential in monitoring the movements of the penny shares in relation to the economic factors that affect these non-marketable securities. Diligence is a must to perform fundamental and technical analyses on the penny stocks in both the buying and selling phases.

When these personal qualities are in place, you can then start to apply the following day trading goals in relation to the specific strategies. These are:

Always be on top of your buy and sell orders as well as the related trading activities on these orders. You want to anticipate the movements and, thus, make the right decisions at the right time - no delays, no hesitations and no greed.
Take the small increments in profits as the opportunities are presented. The principle is that large volume coupled with small profits will eventually lead to high rates of return on investment.

In conclusion, day trading penny stocks is only for individuals willing to take the time and effort to learn the nitty-gritty details of the activity. The rewards are great  but so are the risks.