In the stock market, you may often hear the advice not to trade in fried stocks. However, fried stocks are the favorite stocks for many traders. Fried stocks can provide returns of more than 5% in just minutes, compared to more liquid stocks.
That is why traders, even novice traders with knowledge that is still perfunctory, are often tempted by the profits that can be obtained from fried stocks. So, are you allowed to trade in these fried stocks?
It's okay.. However, if you trade in fried stocks you have to trade with the smallest possible number of lots, and you have to be brave enough to cut losses. Also read: However, I don't recommend you to buy fried stocks, given the disproportionate risk:reward potential. Also read: Trading Strategies in Fried Stocks.
Especially for you beginners in the world of stock, I suggest you never buy fried stocks, even though the majority of fried stocks are cheap and offer lucrative profits. Anyway, if you are a beginner, don't try to enter fried stock.
"Well, why can't you?" Your protest
First. Psychologically immature. A beginner who is just learning stocks, will easily panic with fluctuating stock prices. This is very reasonable. His name is also just learning. Let alone beginners, stock players who have been trading for several years, are not necessarily able to deal with fluctuating stock prices calmly. Therefore, beginners are not recommended to buy fried stocks that are very volatile.
Second. Untrained trading mindset. Beginners are very easily tempted by the lure of large profits. If it goes up, expect it to continue to rise, if it goes down, don't want to cut loss. This is what causes beginner traders to often lose big in fried stocks and get stuck.
Third. Risk: reward that is not comparable. The risks and rewards resulting from trading in fried stocks are not comparable. Back again to psychology, when the psychology of novice traders is immature, when they see the volatility of fried stocks, they will not be able to calm down, even though there is the potential for profit from fried stocks (risk: disproportionate reward).
Fourth. Inexperienced (do not understand trading strategies in fried stocks). It's not easy to study bandarmology to guess where fried stocks will go up, or it's time for a correction. Beginners who are inexperienced in bandarmology are often convinced that stock prices that have gone up fast and unnaturally will rise again. This is what makes novice traders chase fried stocks that are on the rise, and when it's time for a major correction, they're not ready.
"If I'm a beginner, what should I do, Bung Heze?" Ask you
If you are a green light (beginner) in the stock market, it would be better if you target liquid stocks, which are heavily traded (not necessarily LQ45 stocks), whose price movements are not too volatile. For beginners, as much as possible you should avoid fried stocks that have the potential to damage your portfolio. Beginners need to learn psychology and the right trading mindset, that's why if you're a beginner, don't try to trade in stocks with unclear directions.
