You can practice trading in real penny stocks, and in real time, without any risk to your capital. Called “paper trading,” the process simply involves investing imaginary money into real stocks and keeping track of how well your picks perform.
Using paper trading, you should get better at penny stock investing pretty quickly. And the beauty of paper trading is that while you improve, you never risk a single penny of your real money. When you feel comfortable with investing and are consistently profitable with your imaginary trades, make the jump to investing real money and start bringing in your real profits! Here’s how to get started:
Start with an imaginary $50,000.
Watch real penny stocks, and decide which you would have purchased if you had been using real money.
Write down any trades you would have made (both when you buy and when you decide to sell). Include the date, the name of the penny stock, the price per share, and the dollar amount of your purchase or sale.
Invest in numerous penny stocks, rather than only one or two, so that you gain the most “paper” experience.
Keep track of which types of penny stock investments produced a profit and which resulted in a loss. See if you can pinpoint what you’re doing right, and what you may be doing wrong.