Imagine you wanted to learn how to play the piano, and were in the market to purchase one. Now, if you’re not familiar with how much they cost, the range is anywhere between a couple thousand dollars to upwards of several hundreds of thousand dollars.
Do you think if you got a really expensive one, it would help you play better?
Heck no. Unless you’re rich, it makes zero sense to go out and fork over a lot of dough for something like this. The reason being, you are just starting out, you don’t even know if you’ll stick to it, and most likely you’re just playing for yourself, not like you need something fancy because you’ll be recording or performing for large audiences.
In business, they teach entrepreneurs to keep expenses lean and show proof of concept before expanding an operation. You don’t want to get involved with long-term leases or anything else that will put you under capital restraints. Again, you don’t know if the business will thrive, no reason to add pressure early on.
To most people, this makes a lot of sense. However, when you transfer this concept into penny stock trading, some don’t get it. You see, for whatever reason, some people think like you need to have a lot of money to get started in the stock market. That’s simply not true. And it is certainly not true when it comes to good stocks to invest in.
Going back to our previous examples, what is a lot of money going to do for you? In the beginning, you’re learning the fundamentals, discovering who you are as a trader, making mistakes, and hopefully learning from them. In other words, it’s a process… and having a lot of money doesn’t give you a pass or allow you to skip that. Why anyone would think this is the case with day trading stocks is somehow puzzling.
In fact, it actually makes more sense to start off small. Most likely, you will make more mistakes early in your trading career than later. Better to make small mistakes than expensive ones. For those saving, to get X amount to start trading… stop putting it off. Again, why wait? You might find out trading is not for you and realize that you just wasted time.
You must first learn the process of trading, finding penny stocks, and discover which strategies are suitable for your personality type. In addition, you must learn the skills of position sizing and risk management. For the most part, this will require you collecting data from your trades and analyzing that. That requires screen time, it doesn’t matter if you are risking $100 or $10,000 on a trade.
Ultimately, if you stick with it, learn and develop an edge… a time will come when you want to scale up your trading operation. Until then, start off small and begin the journey. Don’t focus on getting rich…focus on learning the process first. And don’t limit yourself to otc stocks, explore large cap stocks, too.
Imagine, leaving your day job to play the piano for a world-class orchestra without having any experience. Sounds silly right? Well, take that concept and apply it to trading. There is a learning curve involved in trading, the idea that you can leave your job to trade is really unrealistic. Well, initially it is. If you get to a point where you develop a strategy that has edge, and you’ve built up a solid track record…then yes, it’s possible to trade full time. However, you just need to get your feet wet in the beginning. That’s why you shouldn’t overly concern yourself with how much money do you need to get started — that’s the key to excelling at penny stock trading.