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How your frame of mind impacts your chances of making money on penny stocks

by , 13 November 2014

Are you a glass half-full or a glass half-empty kind of person? Your frame of mind can make a big difference to your investing.

As an investor in penny stocks, being optimistic has its benefits.

Read on to find out why…

Being an optimistic penny stock investor

Applying optimism to your penny stock investing doesn’t mean ignoring real threats and risks. Weighing up risk is a crucial part of surviving and being a successful investor and trader.

But when it comes to investing in penny stocks, your first port of call should be to look at what could go right. Not what could go wrong.

Through your research, you’ll always come across things that could go wrong. But your main focus should be whether you can make money.

If, on the other hand, you’re overly pessimistic, you can always find plenty of reasons not to invest. This outlook means you’ll miss some fantastic opportunities.

The stock market has its fair share of doomsayers. These people are forever trying to predict the next stock market crash.

But to listen to this sort of commentary can be dangerous.

Many penny stocks are in businesses brimming with potential

Many companies that fall into the penny stock realm are in niche markets. And it’s these niche markets that have the potential to fly given the right opportunity.

For instance, a penny stock making astonishing breakthroughs in areas such as cancer treatment and cloud-based technology, David Thornton in Penny Sleuth explains.

If you can see the potential in a penny stock to solve a problem or improve lives, then you have the chance to make fantastic returns if you invest.

The financial media can have a tendency to focus on the negatives. This can make you doubt your investing decisions too. Yes, accept problems that are real and have an effect, but don’t let them stand in the way of you investing.

If your research tells you that you’ve uncovered a penny stock that has great potential, trust your research. You’ll never be 100% perfect with all your stock picks, but you’ll never have the chance to make money if you don’t commit some of your cash to it.

As long as you’ve done your due diligence on a penny stock before investing, don’t let a naysayer tell you otherwise.

Pessimists can miss opportunities. As an optimistic, you’re in the perfect position to profit.

So there you have it, how your frame of mine impacts your chances of making money on penny stocks.

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