Becoming a day trader can be fraught with anxiety. When you learn how to trade penny stocks in OTC markets and take on the lifestyle of being a high frequency trader, you can pitch yourself into a situation where you are not sure where your financial security is coming from on a day to day basis. It can be very stressful. Unless you manager your overhead, your spending and your activity in a very efficient manner.
That comes from learning about the right way to run a business. Because once you become a trader or an investor, you automatically become a business. You will need to control your spending, keep track of your income, figure out your taxes and make a profit. All that comes from experience. And reading business books with timeless advice about how to conduct yourself in a capitalist system.
OTC markets could be the most capitalist of any financial market. It is always buyer beware when it comes to operating in over the counter markets. So, you need to approach trading in these markets with a significant amount of respect for the risk. Novice traders have no place in OTC markets. The level of experience needed in these markets is rather large. You need to be able to spot bad trends to avoid them and spot good trends to be able to jump on them.
These markets and exchanges are notorious for pump and dump schemes. That is where larger players buy up the majority of shares from a company and pump up the value of those shares with a coordinated PR push. The price climbs, with the help of a compliant financial media. Then the market maker with all the shares dumps their haul in a quick sell-off, leaving others to bear the brunt of the swiftly declining share price. The scam is all too common when there is very little oversight of OTC markets and the financial disclosure requirements are very low.
Building a trading business in this environment can be very tough. Being able to forge your own path is very important. You want to be able to avoid following the crowd. Classic business advice is essential for making your mark.
First off, many people will tell you that if you are truly committed to being a top trader, you need to take the ultimate leap and quit your day job. That is malarkey. Plenty of people can make money in their spare time, day trading just a few hours a day. And you can build yourself a nice cushion for when you get good enough to actually quit your day job. Security is important and you will have plenty of tough times as a trader.
That said, you need to have the stones to take some risks. Calculated risks are what it is all about when it comes to day trading. The most successful entrepreneurs do whatever they can to minimize risk and only embrace it when the profits cannot be avoided.
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