Start Small and Scale Up

Maintain a Strong Watch List

Your watch list is a list of companies you are interested in trading. On your watch list, you are charting the company’s stock behavior and looking for trends. Being able to accurately predict stock movement is key to successfully trading oil penny stocks. The goal is to buy into a position as the stock is moving upwards, or to buy an option, or the right to sell a stock at a given price, as it is going down. Whichever strategy you employ, maintaining a strong watch list is an important part of your trading strategy.

Research, Research, Research!

Oil companies offering penny stocks do not have the same legal filing obligations as those whose shares trade at higher values. As a result, there can be some sketchy stuff going on behind the scenes. While this may be a put-off to some, it provides a tremendous opportunity for those willing to put in the time and do their homework. The importance of research cannot be stressed enough. Read everything you can find on the companies whose stocks you are interested in trading.

When researching a potential oil company to trade there are two important types of analysis: fundamental and technical. Fundamental analysis is understanding the basics of the company, its history, and how it functions. Technical analysis is specific to the company’s stock movement. While both are important to trading successfully, technical analysis is key to trading penny oil stocks.

Spotting Patterns

Maintaining a strong watch list and doing your research, especially understanding the technical analysis of a company’s stock, will allow you to spot patterns as they are developing. When trading oil penny stocks, correlate real-world events with market activity. Watch how something like a natural disaster or political upheaval affects the stock’s price. Look for patterns and when they repeat. There are a variety of different software packages that can help you to recognize patterns and predict stock movement.

With the right know-how, trading oil penny stocks can be an exciting way to generate income.