Trading Penny Stocks – A Fun Hobby Where You Can Make Lot Of Money

Like many investors, I started trading penny stocks as a fun hobby. Looking back on it now, I think it was just an extension of something I learned as a kid – that you can make money with your hobbies!

When I was a kid I loved playing in the dirt and digging up big juicy earthworms for my Dad and Uncles to go fishing with. In fact, I liked digging for worms better than I liked fishing (ok, maybe I was a weird kid). So I guess it came as no surprise to my Mom when I came bouncing into the house one day and announced that I had just made $ 3 by selling worms to our neighbors across the street. I was only 9 years old and this was the first time in my life that I had made money all on my own. What was better even was that I had made money doing one of my favorite hobbies. As the word spread that summer, I got more orders for my squiggly worms and I stuffed my piggy bank full of dollar bills and coins. By the end of the summer, I had more than $ 60 dollars saved up! I was hooked on money hobbies and have been ever since.

For most people, "investing" is very serious business. As people open an IRA and prepare for their eventual retirement, most would think it crazy to add penny stocks to their portfolio. Penny stocks just don't get that kind of respect from usually. Most people are content to grow their portfolio at an average of 3-5% a year with slow growing blue chip and mid-cap stocks.

However, some investors start trading penny stocks on the side as a fun hobby like I did. Most start out by putting something like $ 500 to $ 1000 into a trading account and just play around with it. I have several friends who started out this way, mostly because they know I make good money with penny stocks and they wanted to try it too. However, they were still cautious and didn't want to invest all that much money in the beginning. The good news though is that you can actually make quite a bit of money starting with just $ 500 – $ 1000 because you can buy a lot of penny stock shares for that amount.

I always enjoy when my my friends have that epiphany moment …

… when they suddenly realize that trading penny stocks can easily make them more money than their "serious" investments !!!

That's when they become really motivated to pick my brain because they realize that they can indeed make more than a full time income from trading penny stocks for only a few hours a week if they have the right knowledge.

Before I give you a tip that is sure to make you a lot of money with penny stocks (it is the same tip I give my friends), I want to share a few things I have observed about those who trade penny stocks as a hobby :

Setting Goals and Turning It Into a Game

I've noticed that many penny stock traders like to turn their hobby into a game of sorts and this really does help motivate you I think. They find ways to "keep score" and see if they can "win" the game. Some of my friends have started out by setting goals like turning $ 500 into $ 10000 in under a year.

Please note it is quite possible to turn $ 500 into much more in under a year, as many part-time investors do so, but most people just don't understand this when they start trading penny stocks. Once a trader learns the ropes and they figure out how much money they can really make with penny stocks, their goals become much more ambitious! They might decide to aim for turning $ 1000 into $ 100,000 in under a year (or more)

Sometimes Special Knowledge Allows You To Find Incredible Bargains That Others Can't See

Traditional "money hobbies" usually involved collecting tangible things that the collector thinks will go up in value or better yet they are being sold at a price that is far below what they are actually worth! They can later trade or sell the items they collect at a nice profit or in some cases pass it on to their kids or grandkids. To do this well, it takes a great deal of special knowledge. In fact, if you really know your stuff, it becomes much easier for you to spot a rock bottom bargain. You have to have the special knowledge that it takes to recognize the value in an item that the seller does not see. This is why collectors often hunt through garage sales and flea markets. They are hoping to find something that is far more valuable than what the price tag says because the seller doesn't know the real value. Even if they know the value, they may not know how or where to sell a specialty item.

An aunt of mine used to collect, and sometimes sell at a profit, depression glass. I remember how satisfied she would get when she would find a valuable piece for next to nothing and then sell it at a profit. The bigger the profit, the more she would brag about it. I remember thinking when I was really young that her depression glass looked like old pieces of junk but to her it was treasure because she knew exactly how and where to sell it for a very handsome profit. I can still hear her talking about an old depression glass plate she found, "I only paid $ 1 for that piece and I sold it for $ 100!"

Penny stocks are just like this. The way to make the most profit is buy the ones that most people don't realize the value of. You can do this by acquiring special knowledge yourself (takes lots of time but it is fun) or by getting picks from an expert with special knowledge. Either way, the potential for profit is absolutely amazing! Just so you know, I do both but I tend to make much more when I get the help of an expert.

Specializing In What You Are Most Interested In

You can find penny stocks to buy and sell in any sector. So, many penny stock hobbyists will naturally tend to "specialize" in areas they have a strong interest in. For me, I'm fascinated with new technologies and also in alternative energy so I tend to gravitate toward penny stocks in these sectors. This is because I love to do research in these areas as I enjoy the topic as well as making money from the penny stocks I choose.

Specializing in one sector is one way of making the learning curve less steep. It is certainly easier to become an expert in one sector rather than trying to spread yourself out across many sectors, especially if you pick a sector you are already interested in.

Maximizing the Profit You Can Make Trading Penny Stocks

Sometimes, even though I know a lot about new technologies and alternative energy, I still seek expert help in these areas because penny stock trading is not a full time activity for me and I can't possible know what an expert who studies penny stocks for a living would know. Trading penny stocks is a very fun hobby for me but I admit I've also gotten to the point that I LOVE the money too. It can literally change your life. Also, sometimes I buy penny stocks that have nothing to do with the topics I'm particularly interested in when I get the right advice. I always check to make sure it makes sense but I don't have to do extensive research if I get the right expert picks. I have developed a system to penny stock trading where I buy picks from experts I trust. I determine how profitable a particular source of picks is by following the picks on paper for several weeks or even months before deciding to invest. The process of testing picks can actually be a super fun part of the hobby.

Source by Joe Wolfe

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