How Much to Invest when Investing in Penny Stocks

You need to decide how much money to invest when investing in penny stocks. Make sure you only invest the amount of money that you can afford. Penny stock investment is risky and that you could loose all the money that you put in. Penny stock investing can also be very rewarding. It’s possible to double your investment in a month. After deciding about how much you can afford in penny stocks, make sure you do not put all the investment money into one penny stock. You want to diversify into several penny stocks.

Make sure you do not have all your resources invested at the same time. If you do you will lose a lot of flexibility. You will have fewer options when faced with the need to respond to a fast changing market. You need the flexibility to take quick action to penny stocks that are about to rise or fall.

If you have invested all of your money and your existing portfolio is flat, you don’t have any more funds to purchase rising stocks. The options are either to use more of your own money that you cannot afford or sell some of your current stocks to raise the money.

The first option is truly not a good idea. You are gambling with money that you cannot afford to lose. It is gambling and not investing. What makes you think that you can make money from the added funds? If you could not make it the first time most likely you won’t be able to make it the second time. You are throwing good money after bad and it is with money that you cannot afford to use.

With the second option, selling some of your penny stocks to raise funds seems like a better option. However, it is not what penny stock investing is all about. The only reason you want to sell you your penny stocks is when you think the market has topped is about to decline. This is the best method to make most of your profit and sell before the market starts to decline and not for the reason to raising money. The best way is to keep some of your investment funds liquid, this way you won’t miss out on many profitable trades. By keeping some of your investment funds free allow you to buy into a rising stock without you having to sell some of your penny stocks that are under performing.

With this strategy you can profit from rising penny stocks and also keep the non-performing penny stocks until they rise or when you think it’s the right time to get rid of them. This way you are not rushed into a decision and can decide based on research and rational, and not rush to sell your potentially good stocks to fund additional investments.

The ability to respond quickly to a fast rising market can very much influence your prospect for profits in the volatile market. Keeping a part of your penny stocks investment liquid can help you to achieve profitability and make your penny stock investing more successful.