Hi there!
Congratulations on the insane trade that you took. Characterizing a 150% return on a penny stock as 'investment' may seem outrageous for the majority. However, I would say continue whatever you are doing as long as you understand your 'edge' in the trades that you take.
I am unsure how you manage to pull of that trade. But if you understand what was your 'edge' - meaning you know that this trade will yield a positive expected value, through your indepth research, analysis, whatnots. Then I would say you can continue to do what you are doing since you know the risk and reward + probability of it.
I am not quite sure what you meant by small ETFs to eliminate/mediate the risk. If you are making these penny stock trades quite often, you might want to find a suitable sizing scheme for each of those trades. Kelly Criterion may be an easy approach. I would say try not to exceed 10% of your account on those kind of trades - unless you know that your edge is huge in this trade - meaning you have an extremely high probability in winning - no matter what the payoffs are, you can probably load up your position size - this is regarding trading strategies already, not so much of long-term investment etc.
You can have separate accounts/portfolios - one that contains risky investments, and another that contains safe investments like ETFs and whatnots, so you can limit your overall downside since you are already capping the max loss on your risky trades.
I am assuming that you trade frequently on these penny stocks based off whatever strategy that you have found. However, if it is a one-off luck based trade, then I would recommend to stay away from penny stocks, since its price movements are heavily skewed towards insiders trading, not something I would want to dabble with, unless I have information that others don't have which is what I like to call the 'edge'
Hi there!
Congratulations on the insane trade that you took. Characterizing a 150% return on a penny stock as 'investment' may seem outrageous for the majority. However, I would say continue whatever you are doing as long as you understand your 'edge' in the trades that you take.
I am unsure how you manage to pull of that trade. But if you understand what was your 'edge' - meaning you know that this trade will yield a positive expected value, through your indepth research, analysis, whatnots. Then I would say you can continue to do what you are doing since you know the risk and reward + probability of it.
I am not quite sure what you meant by small ETFs to eliminate/mediate the risk. If you are making these penny stock trades quite often, you might want to find a suitable sizing scheme for each of those trades. Kelly Criterion may be an easy approach. I would say try not to exceed 10% of your account on those kind of trades - unless you know that your edge is huge in this trade - meaning you have an extremely high probability in winning - no matter what the payoffs are, you can probably load up your position size - this is regarding trading strategies already, not so much of long-term investment etc.
You can have separate accounts/portfolios - one that contains risky investments, and another that contains safe investments like ETFs and whatnots, so you can limit your overall downside since you are already capping the max loss on your risky trades.
I am assuming that you trade frequently on these penny stocks based off whatever strategy that you have found. However, if it is a one-off luck based trade, then I would recommend to stay away from penny stocks, since its price movements are heavily skewed towards insiders trading, not something I would want to dabble with, unless I have information that others don't have which is what I like to call the 'edge'