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Why Entrepreneurs are More Likely to Succeed Trading Penny Stocks

Enterprise owners have much in common with successful penny stock traders although few recognize the relationship.

Entrepreneurs boast all of the necessary character traits that a trader must possess so enterprise leaders that want to learn how to day trade get to start off from a position of strength.

Traders Are Entrepreneurs

Penny stock traders understand there is no guaranteed salary and there are expenses that must be paid no matter what. But most important, traders are opening themselves to risk and must commit their own capital or money raised from investors.

Sounds familiar? Entrepreneurs certainly know the feeling.

Enterprise owners have to purchase materials, pay rent on their property, and pay employees no matter what. If sales are slow, the entrepreneur needs to cover the expenses regardless, either through a loan or taking money out of their own pocket. 

Skilled entrepreneurs have learned to cope with this reality and the smart ones have contingency or emergency plans for slow periods. They also value the importance of money and savings and understand the difference between a wise investment and foolishly throwing their money away at a poor idea.

And when a compelling opportunity presents itself, they pounce on it. This important money management skill translates well to penny stock traders. Entrepreneurs that take up this field will recognize from day one what is and isn’t a good trading opportunity. 

The reason why many penny stock traders fail is that they are too eager to enter into a trade. They sacrifice their own rules and strategy just to get into a trade. Entrepreneurs, on the other hand, fully understand patience is a virtue.

Entrepreneurs Know How To Adapt

Enterprise owners understand the importance of never getting too emotionally attached to an idea or product and how to work quickly to overcome obstacles. If an entrepreneur finds that their product isn’t working well within a specific market, they work quickly to regroup and plan again from scratch.

It is time to get back to the drawing board and rethink everything from top to bottom. Maybe the product can sell better in another market? Maybe the product doesn’t meet the high standards of what clients expect. Or maybe the customer wants a cheaper alternative to an amazing product.

All of the money spent in the past is a “sunk cost” — that is it is gone and never coming back. Even prominent billionaire Welshman and one of Silicon Valley’s most respected entrepreneurs Sir Michael Moritz made mistakes and poor investments along his journey.

Making mistakes is very common in leadership and should be expected. But a good entrepreneur knows that doubling-down on a mistake and throwing good money at bad money is always a horrible decision.

The ability to avoid the temptation of buying more shares after a bad trade is what separates poor traders from good traders. Foolish traders sit on a stock that is down 10% and think to themselves: “let’s risk more money on this bad trade because I still think I was right even though it’s obvious I’m not.”

Good traders with the entrepreneurial spirit will say: “this seemed like a good trade setup at the time but it isn’t working out. Better to cut my losses at 10% before it gets much worse. Now time to move on to the next trading idea!”

But a good trader most certainly doesn’t stop there. At the end of the trading session, they revisit a losing trade and go over their thought process. Maybe something was overlooked in the fast-moving market and this new knowledge can be applied to the next trade. Or maybe it was just a good trade gone bad. It happens.

Entrepreneurs Just Work Harder

Ever encounter an entrepreneur at the pub or elsewhere that doesn’t express a passion for what they do? Anyone who starts an enterprise loves their job and thrives to be better.

Entrepreneurs wake up every morning and want to find ways to increase sales, lower costs, and hire more people. If it means they have to put in 100 hour work weeks to get one step closer to their goals they will do it with zero hesitation.

A lot of penny stock traders lack this mentality. They fall under the trap that making money in the market is easy and anyone could do it with little to no effort. Quite the opposite is true. Studying the market requires tremendous hard work and passion.

Few penny stock traders stay up past midnight every day learning about technical analysis tools. But for hard working entrepreneurs, this is the norm.

Source: STT. It takes a lot of time to understand what is going on in this photo. Do you have the drive to figure it out?

Conclusion: The Right Mindset Is Key To Success

Opening up a penny stock trading account requires a stockbroker account with Robinhood or any of the other options, a deposit as low as £150 or so (depending on the broker), a computer, and an internet connection.

Anyone in the world can start trading penny stocks within a day or two. But few have the necessary mindset to succeed.

Entrepreneurs by default of learning the value of hard work and dedication have an advantage over others. While this in no way guarantees any success, it means the path towards financial freedom might be just a little bit easier.