You can make a lot of money in a short amount of time by trading in penny stocks. If that appeals to you, then take heart and don't be one of those who backs away. Some people shy away from this kind of trading because they're afraid of the erratic nature of these stocks.

They worry too much about the risk instead of focusing on the possible gains. However, with a little guidance you can minimize the risk and thus do very well. I'm here to give you some of that guidance you need as you begin your trading career.

The first thing you need to be aware of is that there are definite patterns you can locate and follow in penny stocks. It's kind of like riding a wave. This is true with all stocks, but especially true of these. This is where you have to do your research. You go back over the history of a particular stock's trading life.

You'll begin to see where the stock rises and where it falls and whether it does a similar thing such as rising for a while and then falling again over a period of a couple of months. This way, when you see it fall, you can buy with confidence knowing that it will probably rise again.

You're buying at the low point which is always wise. The other thing you need to do is to keep a record of the information you discover. Don't just leave your findings up in your head because you'll think you remember correctly but you really won't.

Then you might buy prematurely or not buy when the time would be absolutely right. This way you become "friends" with a certain group of stocks. You know them well, and you'll always know when buying and selling is indicated. It's like having a group of investments at your beck and call just standing in the wings ready to make some money for you when the time is right.