It’s a common mistake. Many investors tend to use investing and trading interchangeably, but they are not the same thing. The goals of engaging in penny stock trading are very different than those of penny stock investing.
Let’s break it down in a very simple manner.
Penny Stock Trading
A stock trader is someone who buys and sells stock for a very short period of time-could be five seconds or five days.
The goal of the stock trader isn’t to plant money into some stock, water it and hope it will one day grow tenfold. The goal is to make some money and get out-to play the swings. We have many more Stock Market Investing Articles Now Available.
A penny stock trader is interested in the swings-the ups and downs. A penny stock with good volatility is best. It doesn’t matter if a stock opened at $1 on Monday and closed at $1 on Friday as long as it bounced around in the middle.
Penny Stock Investing
Unlike the trader, the penny stock investor will buy a stock and hold onto it for a longer period of time-could be a few months or years even.
The goal of the stock investor is to buy a stock and watch it grow to something larger. For instance, if the purchased penny stock was $1 per share today and $1.50 per share in five months, the investor is happy.
The investor holds the stock constantly and therefore all that matters is the buying price and the eventual selling price and not what happening in-between the two.
By in large, those who buy penny stocks tend to be traders-buying stock at $1 today and selling for $1.15 tomorrow and re-buying at $1 the next day. Whether you’re a penny stock trader or investor, penny stocks represent a fantastic opportunity for profit. We have many more Stock Market Investing Articles Now Available.