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I am a student studying and I got interested in Penny Stocks, because I hope to gain money earlier in my life.

I hope to invest the first amount of money that I may earn by part time job; cleverly on stock trading. I know it's risky, But suggesting that I would learn the best I can, and ask for many advices, and also watch all the DVDs out there for teaching trading Techniques (like Timothy Sykes and so on)

  • How much time per day on average I must dedicate in order to start trading?
  • Is there certain hours that I need to be awake at? I mean considering Israel's time-zone for example, does it make a difference that US is 7-8 hours behind israel?
  • Will spending 2-3 hours a day studying Trading Techniques and watching teaching DVD's will be sufficient? or according to ur expertise this thing demands to be completely free in order to start making progress?

I hope you read my message and I'm looking forward to your reply.

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    Then most likely whatever time you spend will be wasted and whatever money you allocate to this will be lost. Trading penny stocks for speculative profit is generally not a very good idea unless you're doing something illegal.
    – littleadv
    Commented Oct 3, 2015 at 8:03
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    I have no idea who Timothy Sykes is, so cannot comment. But retail investor speculating on penny stocks will statistically lose his money.
    – littleadv
    Commented Oct 3, 2015 at 8:52
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    How much time per day should be spent at the blackjack table? The answer is a function of your endurance and bankroll.
    – user662852
    Commented Oct 3, 2015 at 12:36
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    "No one ever got rich by getting a job!" - Said no doctor earning $250K+ working at a hospital. Working for one's self, starting a business, is great, but it's not the only way to wealth. Unless, of course, you treat investing as a side job, which in a sense is the only way to have savings make you money.
    – JTP - Apologise to Monica ♦
    Commented Oct 7, 2015 at 2:26
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    @MarkDooney: I'm afraid that's the kind of false dichotomy and magical thinking that causes many folks to wind up poorer than they should. Trying to get rich in the market more often keeps you from becoming comfortably well off. Investing appropriately can be a multiplier of wealth, but results are tremendously better if you start with a decent income and regular savings.
    – keshlam
    Commented Oct 7, 2015 at 5:00

2 Answers 2

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How long is a piece of string?

This will depend on many variables. How many trades will you make in a day? What income would you be expecting to make? What expectancy do you need to achieve? Which markets you will choose to trade?

Your first step should be to develop a Trading Plan, then develop your trading rules and your risk management. Then you should back test your strategy and then use a virtual account to practice losing on. Because one thing you will get is many losses. You have to learn to take a loss when the market moves against you. And you need to let your profits run and keep your losses small.

A good book to start with is Trade Your Way to Financial Freedom by Van Tharp. It will teach you about Expectancy, Money Management, Risk Management and the Phycology of Trading.

Two thing I can recommend are: 1) to look into position and trend trading and other types of short term trading instead of day trading. You would usually place your trades after market close together with your stops and avoid being in front of the screen all day trying to chase the market. You need to take your emotion out of your trading if you want to succeed; 2) don't trade penny stocks, trade commodities, FX or standard stocks, but keep away from penny stocks. Just because you can buy them for a penny does not mean they are cheap.

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    Thanks for the informative answer! I just bought the book and I will start reading it. And I will study the benefit of commodities trading over penny stocks. it seems that penny stocks is a really dangerous thing, untill now I've heard only negative opinions about it, although I've heard that many guys have made a lot of money trading it. I guess after getting some information about the whole thing I will choose whats best for me in the market.
    – Firas Abd El Gani
    Commented Oct 3, 2015 at 13:42
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1) Don't trade individual stocks. You expose yourself to unnecessary risk.
2) Pick a fund with low expenses that pays a dividend. Reinvest the dividend back into the fund.

To quote Einstein: The greatest power on earth is compound interest.

Something is wrong with the software of the site. It will not allow me to answer mark with another comment. So I have to edit this answer to be able to answer him.

@mark No, I am not hoping the price will go up. The price is only relevant in comparison to the dividend. It is the dividend that is important, not the price. The price is irrelevant if you never sell. Dividend paying securities are what you buy and hold. Then you reinvest the dividend and buy more of the security. As I am buying the security with the dividend I am actually pleasantly surprised when the price goes down. When the price goes down, but the dividend remains the same, I am able to buy more shares of the security withwith that dividend. So if the price goes down, and the dividend remains the same, it is a good thing.

Again, the site will not allow me to add another comment.

@mark I profit from my investment, without selling, by receiving the dividend. I used to be a speculator, trying to get ahead of the market by 'buy low, sell high' but all that did was make money for the broker. I lost as much as I gained trying to do that. The broker made money on each transaction, regardless if I did or not. It took me decades to learn the lesson that 'buy and hold' of dividend paying securities is the way to go. Don't make my mistake. I now get, at least, 5.5% yeald on my investment (look at PGF, which forms the backbone of my investments). That is almost 0.5% per month. Each month that dividend is reinvested into PGF, with no commission. You can't beat that with a stick.

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    You actually expose yourself to unnecessary risk by just buying and holding and hoping the price will go up. Your advice is completely worthless, it is like you are trying to convert someone who doesn't want to be converted.
    – user9822
    Commented Oct 6, 2015 at 8:45
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    Jack, you have got to be kidding! You are so inexperienced for an old fella. You don't know how risky your strategy is. If a stock price starts dropping whilst the rest of the market continues going up don't be surprised it it starts dropping because it may be doing poorly financially, which means it may start reducing or stop paying its dividends. If the whole market is coming down in a crash, then many stocks may reduce their deividends or stop paying dividends altogether. Dividends are not a guarantee, and if you are buying soley on the dividends you are playing a very risky game.
    – user9822
    Commented Oct 6, 2015 at 10:07
  • A REIT, by law, must pay its stockholders the profit which it makes. Research into the history of dividends is, of course, prudent. Thus I have bookmarked Dividend.Com
    – Jack Swayze Sr
    Commented Oct 6, 2015 at 11:50
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    Exactly, so it there is no profit there will be no dividend. And by the way if you never sell you will never benefit from your investments. And like I said, if the price starts falling and keeps falling, the dividens will soon follow until there is no more dividends. You should be concerned about the long term price direction, because that is what will tell you if the asset is financially viable going into the future. You might have to learn your lesson the hard way when you have to come out of retirement and start working again in your 60s and 70s.
    – user9822
    Commented Oct 6, 2015 at 20:30
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    Mark, speaking as someone who is approaching retirement with savings that are likely to outlive him even if science gives us all another century of health: Hogwash.
    – keshlam
    Commented Oct 7, 2015 at 19:09

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