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I have a long conversation with a member earlier today about losses he has taken in his account – only when trading penny stocks. I do not consult individuals, but I took his call and asked just a few questions before I found out exactly what he did wrong.
He expressed to me how “conservative” he was and how “careful” he was as a stock trader. He said he was down 40% or more in virtually all of his penny stock transactions.
I asked him why he would buy at what is relatively the lowest price as he told me he did, and then sell at a loss.
Then he threw in the famous answer I heard so many times.
“Oh, my stop loss order kicked in.”
UP NEXT: LEARN WHY THIS IS NOT SUCH A GREAT IDEA FOR PENNY STOCK TRADING
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I then asked him this: “Did almost all of these stocks trade above your original buy-in price within a few hours or a few days of your stop loss order clearing you out?”
He answered yes.
I referred him to my article:
Here is a quote:
“Experts on the major markets use the infamous Stop Loss Order – Don’t Make That Mistake!. In the penny stock markets it is financial suicide to use a Stop Loss Order.”
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