subject: Day Trade Small Cap Shares Profitably [print this page] Day Trade Small Cap Shares Profitably Day Trade Small Cap Shares Profitably
If you want to day trade stocks this means that you will enter and exit shares in the same day, sometimes you will hold them for the best part of the day and other times only for a few minutes and generally never overnight.
An investor is less concerned with short term price moves and will prefer to hold onto a share for a longer period of time waiting for the value of the stock to appreciate with time.
For both strategies there will always be pros and cons for each, read on to find out more
{If you need some more background knowledge about penny stock investing before going any further then check out Small Cap Stock Investing}
When looking at day trading penny stocks these traders are looking to make money from the volatility of the share displayed throughout the day by entering and exiting positions often, and sometimes buy and leave a share many times over the same day.Volatility is as such a requirement in order to make consistent returns! It does not matter which way the general market is trending, you will always find small cap shares that are highly volatile and moving in an upwards trend.
{Check out this more extensive guide at Day Trade Small Cap Stocks}
Volatility can be a great thing for a day trader but also a great danger because a share that can move up very quickly can also move down very quickly and you end up with a considerable loss.If you are new and make a lot of these mistakes early on and have too much of your money invested you can end up with losing all your money very quickly.To help stop this you should always proceed with caution and only ever trade with money that you can afford to lose.
Be wary of becoming caught up in what is known in the industry as a 'pump and dump' scenario which often occurs to those small cap shares you may have seen advertised in your spam emails, in which investors rush into to buy the share quickly and then sell off at a profit and if you're not fast enough you can end up with a sizeable loss.. The worst case scenario is you are left holding stocks in a stock that is now worthless and this ties up all your money to invest in other stocks.
When starting out day trading micro cap stocks it pays to set aside a large portion of your money you to invest and invest it into other, more reliable investment vehicles such as more established stocks or bonds and what you are left with you can try trading.You should base that decision by looking at how much of your investment can you afford to lose.
The next step is to set yourself up with an online brokerage account and if you are going to be a true day trader and only buy and exit positions on the same day then you should ensure you have access to live market data feeds as you do not want to be making decisions on data that is 20 minutes old. Your broker will charge you a small commission after they have executed the trade on your behalf.
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