Penny stocks are a fascinating financial instrument that draws attention every single day because of how much opportunity there is to increase your wealth by trading them. The fact of the matter is, if your house doubled in value overnight, you would be pretty thrilled with how much money that could make you. The same is very much true with penny stocks, only instead of having wealth vested in real estate, your money is in the financial markets.

Any trader looking to make a fortune in the financial markets has plenty of work ahead. There’s really no easy way to do it and most people who advertise an easy way are making more money selling it than by using it. However, one thing you will notice about trading penny stocks on a systematic basis is that the money will come with persistence and discipline. Trading on a system versus trading on discretion is a lot like the difference between working out arbitrarily every day you’re in the gym versus going in with a program and daily goals to reach.

So how can you make millions trading penny stocks? You have to learn to master volatility and capture opportunity. My advice would be to subscribe to a quality alerts service that has a good track record of identifying penny stocks that are about to break out of a pattern. What’s amazing about penny stocks is that a breakout that would cause a normal stock to rise 2 or 3 percent in value could send a penny stock skyrocketing 50 or 100 percent!

Just keep in mind that the exact opposite can happen, and it’s important to trade defensively with stop losses just like any other trader might. If you want to be rich from trading penny stocks, you’re going to have to have great market timing but also be able to cut your losses when you know you’re on the verge of losing big time.

As I said earlier, you need a penny stock alert service in order to get in on big price action that you would otherwise miss. I’ll be testing out one of my favorite services throughout 2010 and listing my performance on my blog at http://www.tamingthemarkets.com, so feel free to check it out.

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