Those who want to become successful traders need to know how to invest in penny stocks without losing their shirt. The list below contains 8 penny stock strategies that separate the successful (and rich) traders from the ones who jump in without a clue. If you have a desire for upper body warmth, ask yourself if you are using all of these strategies in your trading:

1. Don’t trade on unregulated exchanges: The SEC regulates stocks sold on the NYSE and NASDAQ exchanges. These companies are required to fill out quarterly and annual reports. The reports give investors a detailed view of a company's overall financial health and future outlook. You can also read free reports such as ones from Reuters, giving gain access to all the latest inside information about a particular company. Don’t buy a stock if you have no idea of its financial viability.

2. Diversify your Stock Investment: One very valuable tip to remember when trading penny stocks is to figure out a maximum percentage that you will invest in each stock. Also, purchase a variety of stocks so all of your money is not all in one place. This will of course minimize your risk of a devastating loss. Successful traders will tell you the secret to making money really lies in minimizing losses.

3. Beware of Stock Investment Scams: Don’t invest in a company that you know very little about. If you aren’t careful, you could end up with stock that has no real monetary value. Make sure you do your research and learn as much about the company in which you will invest before you make a decision to purchase stock the stock.

4. Prepare yourself for the Ups and Downs of Trading: Sometimes you will profit from of a trade and other times you will lose money. This will happen no matter how careful you are. If you lose, make sure you do not let your emotions get the best of you. Take a short break and analyze the previous moves you made while thinking of how you could improve in the future. If you have several losing trades in a row, don’t purchase any real stock for a short time. Revert back to a stock simulation until your trades become profitable again.

5. Evaluate the risk of Stock Investment: Making money from penny stocks is not a sure thing. If you don’t want to end up homeless and begging on the street, you will learn as much as you can about what works on the penny stock market and do your due diligence. If you are willing and prepared to accept the risk of investing in penny stocks, it could turn out to be a profitable investment avenue for you.

6. Educate yourself: Visit reputable websites that can teach you about all aspects of trading. Don’t miss the ones offering stock trading simulation software, often known as paper trading. You can find investment information in various magazine and newspaper publications, as well as in other periodicals. Other ways of learning include purchasing ebooks, stock trading courses, or systems developed by successful traders. Make sure if you buy one of these that it has a money back guarantee. Also, if any of the information in this article is new to you, just type in the term in a search engine and make sure you know it inside and out. The more you know, the more you’ll make.

7. Hire a Broker You Trust: Another aspect of trading is to make sure you hire a stockbroker that you can trust to complete honest and fair trading transactions. You will want to carefully consider all your options before choosing your broker.