Archive for March, 2009
Momentum Trading Of Penny Stocks
Written by troy on Wednesday, March 18, 2009 | No Comments
Categories: Uncategorized Tags: High Risk, Investment Losses, Momentum Trading, Selling Stocks, Stock Investors, Stock Market
Day trading of penny stocks is a high-risk venture with a very high potential for earnings and also a very high potential of loss. This risky activity is not recommended to be done habitually, and it is it not even encouraged.
But what do you do if, at a certain point in your stock market practice, you notice that there are particular penny stocks that seem to be appreciating rapidly? By rapidly, you notice that its price moves up quite quickly over the course of hours or even minutes. You also notice that relative high volumes of the stock are being traded.
You can assess the risk of investing in the penny stocks, carefully considering if the potential gain would outweigh the risk of loss of your investment. Your choice if you want to invest or not, but whatever decision you make, don’t dilly-dally make a decision, then stick to it. Changing your mind about that particular rapidly moving penny stock may make you much more susceptible to investment losses later on.
If you decide to invest in the rapidly moving penny stocks, then you are in a position to do momentum trading.
Momentum trading often gets started when penny stocks are mentioned in newsletters as a hot buy and investors rush in to buy that particular penny stock. The rush to buy the stock makes the price of the stock go up. Market makers raise the price of the stock because of the laws of supply and demand there is often not much of the penny stocks they have to begin with, and they are flooded with the demand of the stock.
Investors such as you, who have noticed that the penny stocks prices have been moving up, will be convinced that the prices will still go higher and put orders for the stocks minutes or even seconds apart from the last order of the stock.
Eventually the stock buying frenzy slows down, and successive selling drives the penny stocks prices down. In momentum trading situations, it is not uncommon to have a 10 cent stock move up to 50 cents in a couple of hours, and then go down to 15 cents after half a day. Sometimes, the price changes can be much higher and much more rapid.
Momentum trading seeks to gain profit from these quick price changes. This type of activity can be very profitable for the early buyers of the stock, if they make the right decisions and keep their greed in check.
To profit from momentum trading, you must place your buy order as soon as you make the decision to invest in the penny stocks that you have noticed. Or if you are the lucky enough to receive such a newsletter or tip recommending a buy of the particular stock, and you trust the newsletter or tipster, place the order as soon as your receive the tip.
Remember to keep your greed in check by placing a limit order when buying the penny stocks the stock prices changes so fast in momentum trading. Place that one order and wait for the price movements. Do not be tempted into chasing the price of the stock as it rises. If you do, and catch the penny stocks at the price decline stage, you would incur losses.
Momentum trading is profitable if you are disciplined and you keep your greed in check. You have identified the rapidly moving stock. You placed that one order. You did place only one order at that particular price and didn’t order more as the penny stock has moved up, haven’t you? Good. Now, you decide at what price you would like to sell your stock, and sell it when the penny stocks price has reached that point.
As soon as you receive the confirmation that you have bought the stock, place your next trade, and that should be a limit sell at the price that you have decided to unload your stock. Keep your greed in check. Many investors hold off selling their stock because they see the price going higher and higher. You need to be disciplined enough to buy a rapidly rising penny stock, and then sell it in as little as ten minutes later with a small but satisfying profit. By being disciplined enough to sticking to this method when momentum trading, these small gains that you make will add up over time.
By: Nir Dotan
About the Author:
But what do you do if, at a certain point in your stock market practice, you notice that there are particular penny stocks that seem to be appreciating rapidly? By rapidly, you notice that its price moves up quite quickly over the course of hours or even minutes. You also notice that relative high volumes of the stock are being traded.
You can assess the risk of investing in the penny stocks, carefully considering if the potential gain would outweigh the risk of loss of your investment. Your choice if you want to invest or not, but whatever decision you make, don’t dilly-dally make a decision, then stick to it. Changing your mind about that particular rapidly moving penny stock may make you much more susceptible to investment losses later on.
If you decide to invest in the rapidly moving penny stocks, then you are in a position to do momentum trading.
Momentum trading often gets started when penny stocks are mentioned in newsletters as a hot buy and investors rush in to buy that particular penny stock. The rush to buy the stock makes the price of the stock go up. Market makers raise the price of the stock because of the laws of supply and demand there is often not much of the penny stocks they have to begin with, and they are flooded with the demand of the stock.
Investors such as you, who have noticed that the penny stocks prices have been moving up, will be convinced that the prices will still go higher and put orders for the stocks minutes or even seconds apart from the last order of the stock.
Eventually the stock buying frenzy slows down, and successive selling drives the penny stocks prices down. In momentum trading situations, it is not uncommon to have a 10 cent stock move up to 50 cents in a couple of hours, and then go down to 15 cents after half a day. Sometimes, the price changes can be much higher and much more rapid.
Momentum trading seeks to gain profit from these quick price changes. This type of activity can be very profitable for the early buyers of the stock, if they make the right decisions and keep their greed in check.
To profit from momentum trading, you must place your buy order as soon as you make the decision to invest in the penny stocks that you have noticed. Or if you are the lucky enough to receive such a newsletter or tip recommending a buy of the particular stock, and you trust the newsletter or tipster, place the order as soon as your receive the tip.
Remember to keep your greed in check by placing a limit order when buying the penny stocks the stock prices changes so fast in momentum trading. Place that one order and wait for the price movements. Do not be tempted into chasing the price of the stock as it rises. If you do, and catch the penny stocks at the price decline stage, you would incur losses.
Momentum trading is profitable if you are disciplined and you keep your greed in check. You have identified the rapidly moving stock. You placed that one order. You did place only one order at that particular price and didn’t order more as the penny stock has moved up, haven’t you? Good. Now, you decide at what price you would like to sell your stock, and sell it when the penny stocks price has reached that point.
As soon as you receive the confirmation that you have bought the stock, place your next trade, and that should be a limit sell at the price that you have decided to unload your stock. Keep your greed in check. Many investors hold off selling their stock because they see the price going higher and higher. You need to be disciplined enough to buy a rapidly rising penny stock, and then sell it in as little as ten minutes later with a small but satisfying profit. By being disciplined enough to sticking to this method when momentum trading, these small gains that you make will add up over time.
By: Nir Dotan
About the Author:
Nir Dotan is a writer and promoter of
Penny Stocks
services, and
Penny Stocks Preferred source for the latest news and information on the best and brightest Small Cap Stocks.
Investing in Penny Stocks – is it Worth the Risk?
Written by troy on Tuesday, March 17, 2009 | No Comments
Categories: Uncategorized Tags: Stock Trades, Stocks Market
Investing is something many people have turned to in order to make some money on the side. Since stock trades are now the most viable solution for investing a sum of money into something potentially profitable, this is a path many have undertaken.
I believe that most people know what stocks are. A company can be characterized through its total assets minus all of its liabilities. A stock represents the portion of that result which is held by a shareholder at a given time. Stocks can be more or less profitable, depending on the efficiency of the company and its ability to return profit for each dollar that was invested into it.
The companies included in the stock trades market can be divided in two categories. Large companies, with high quotations are traded in the major exchanges like New York Stock Exchange, National Association of Securities Dealers Automated Quotations or American Stock Exchange. These are the places where people with significant income can play around, because the transactions reach incredible sums.
But for other people that try to enter this market with a relatively low investment there are other options like the penny stocks market. This implies greater risks from the investor’s point of view, but great risks can involve great rewards.
If you wonder what penny stocks are, let me try to explain. One of the first conditions that must be satisfied is the low price of the stock, which is under 5 dollars. The market capitalization of the company must also be under 500 million dollars.
If an investor that is searching for a quick solution to enter the stock trades market with a low amount to start with, then penny stocks might be the answer. However there are some things you should consider before you make any investment.
The potential to make incredible amounts of money in a relatively short period of time is indeed one of the most appealing factors that draw investors towards penny stocks. Because of the low listings, any change in the prices can result in hundreds of times the initial investment. Some people may become rich over night if they make the right choices.
On the other hand, there is also the possibility to lose all your money. One of the reasons for this may be due to the lack of potential buyers, which can result in good theoretical earnings, but if there is no one to buy, they stay theoretical. There is also the chance for the stocks to plummet, which will result in great losses instead of great earnings.
The penny stock trades market requires little documentation from the companies listed and therefore it is a little difficult to gather information on the company you are looking to invest in. These companies are small trying to make it big or they could be lacking in cash.
One of the best solutions you can hope for is trying to find as much information as you can and always consult your financial advisor. Since the Internet is one of the best sources for information, this is the place you should start. One of the best websites for this can be found at speculatingstocks.com.
By: Jhoana Cooper
About the Author:
I believe that most people know what stocks are. A company can be characterized through its total assets minus all of its liabilities. A stock represents the portion of that result which is held by a shareholder at a given time. Stocks can be more or less profitable, depending on the efficiency of the company and its ability to return profit for each dollar that was invested into it.
The companies included in the stock trades market can be divided in two categories. Large companies, with high quotations are traded in the major exchanges like New York Stock Exchange, National Association of Securities Dealers Automated Quotations or American Stock Exchange. These are the places where people with significant income can play around, because the transactions reach incredible sums.
But for other people that try to enter this market with a relatively low investment there are other options like the penny stocks market. This implies greater risks from the investor’s point of view, but great risks can involve great rewards.
If you wonder what penny stocks are, let me try to explain. One of the first conditions that must be satisfied is the low price of the stock, which is under 5 dollars. The market capitalization of the company must also be under 500 million dollars.
If an investor that is searching for a quick solution to enter the stock trades market with a low amount to start with, then penny stocks might be the answer. However there are some things you should consider before you make any investment.
The potential to make incredible amounts of money in a relatively short period of time is indeed one of the most appealing factors that draw investors towards penny stocks. Because of the low listings, any change in the prices can result in hundreds of times the initial investment. Some people may become rich over night if they make the right choices.
On the other hand, there is also the possibility to lose all your money. One of the reasons for this may be due to the lack of potential buyers, which can result in good theoretical earnings, but if there is no one to buy, they stay theoretical. There is also the chance for the stocks to plummet, which will result in great losses instead of great earnings.
The penny stock trades market requires little documentation from the companies listed and therefore it is a little difficult to gather information on the company you are looking to invest in. These companies are small trying to make it big or they could be lacking in cash.
One of the best solutions you can hope for is trying to find as much information as you can and always consult your financial advisor. Since the Internet is one of the best sources for information, this is the place you should start. One of the best websites for this can be found at speculatingstocks.com.
By: Jhoana Cooper
About the Author:
Trying to find the companies that are worth investing in on this stock trades market can be a difficult task. Whether the risk of investing in penny stocks is worth taking or not is entirely up to the investor, because it can be risky or rewarding.