That’s right, enough reading and studying. Stop procrastinating and start investing. The only way to truly get experience in the field of penny stock investing is to just go out there and do it. You may win some and you may lose some but having the experience with real money is truly the only way to experience investing and knowing yourself.

I don’t mean to come off too harsh here but as someone who has done both the paper trading and the live trading I can tell you that there’s a big difference between the two. First off, things aren’t very emotional when you’re paper trading. That’s a good thing and by design many people will tell you that keeping emotions out of investing is the best road to success. Those people would be correct, however for investing beginners the reality is that the emotions are present when there’s real money on the line. That money plays an important role in the psychological way you react to changes in prices. Especially in the penny stock field where volatility will eat the weak alive. You are the most important part of your investing strategy.

A big drawback to paper trading penny stocks is that your “order” will be filled at the exact price you desire. There’s unlimited volume when paper trading. In the real world there is a limited float of stock available for purchase. This is both a blessing and curse for most investors, but ultimately it’s going to affect when and where your order gets filled. I would always recommend using a limit order and never a market order with these types of stocks, but that does mean you run the chance of your order not getting filled.

Once you’re invested with real money and you see real negatives in your balance sheet you will really see what your emotions are like. When the price drop by 30% are you going to have to stomach to hold on? You may or you may not, but either way you will need a plan and an exit strategy. If you believe in the company you may want to hold on or you may have already set stop losses to prevent you from any deeper losses.
This works on the opposite side of the trade as well.

When you’re profiting all is well and of course you’re amazing and will be a millionaire in just a few short years. Another question you’re going to have to ask yourself is if you’re too greedy or not greedy enough? Letting your profits run is a good thing, however never letting the profit motive cloud your objective judgment of the company behind the share price. Again, have an exit strategy in mind.

Many of the factors mentioned simply don’t exist in paper trading. It’s good to follow companies for a while performing due diligence however to really know yourself and your trading style you will need to enter the real world of trading. It doesn’t have to be your life savings, even a small amount invested will show cracks in your plans faster than a fictitious account.

Go on and sign up for an online brokerage account and start trading!

If you sign up with Questrade there’s a $50 bonus.

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