Posts Tagged ‘Penny Stock Investing’
Penny Stock Investing Tips
Written by troy on Wednesday, March 03, 2010 | No Comments
Categories: Penny Stock Investing, Penny Stock Strategy, Penny Stock Trading Rules Tags: Penny Stock Investing, Penny Stock Traders, Penny Stock Trading, penny stocks, Trade Stocks
If you want to be successful in investing then you need to live by a set of rules. Penny stock investing is no different. In fact, because of the volatility of penny stocks it is probably even more important to trade by some very specific rules. With that in mind here are a few penny stock investing tips to help in your stock trading.
Tip #1
Always trade stocks with good volume. This is especially true in the penny stock trading world. Since most penny stock traders trade thousands of shares it is important to trade in stocks that have a high enough daily volume to be able to absorb you moving in or out of a position. In thinly traded stocks you could move the stock price by up to 5% against you if you had to get out. Low volume will work against you.
Tip #2
Don’t follow too many penny stocks. One of the mistakes of traders is that their attention is too divided. You do not need to follow 50 or 100 or 200 stocks to be successful in penny stock investing. In fact I would say failure is proportionate to the amount of stocks you are trying to follow. I would recommend putting together a watch list of 10 or 20 companies and look at their charts every day. If you try to track too many stocks you will miss big moves when they occur. Following a smaller watch list allows you to get to know your stocks. You are aware of earnings dates and some fundamentals. You begin to get a feel for its trading pattern.
Tip #3
Don’t be too diversified. The point of trading penny stocks is to be able to take advantage of the large swings. If you are too diversified (i.e. holding too many positions) you will water down your profit potential. I would recommend not holding more than 3 or 4 positions. Does this create more risk? Of course it does. But you need to manage risk by your trading rules and not through diversification.
Tip #4
Have specific trading rules in place. As I mentioned earlier no one will succeed in penny stock investing apart from a disciplined set of trading rules. Before you begin trading you need to have a defined set of entry strategies and exit strategies. then you must stick to them like glue. These rules are your lifeline in trading. Without them you will go under.
Why are Penny Stocks Attractive?
Written by troy on Wednesday, April 29, 2009 | 2 Comments
Categories: Uncategorized Tags: Penny Stock Investing, Profits, Trading Stock
One thing that a penny stock investor looks for when evaluating which companys stocks to trade in is how it is expected to perform in the marketplace. Knowing how investors react to this particular stock can be the difference in making hug gains or great losses. Unless you’re interested in a monetary and emotional roller coaster ride then sound analysis is a must.
Financial forecast and growth are usually what most expectation are based on unless the company has some significant proprietary news. If news hits the market and a penny stocks value rises throughout the day, then it can be a strong projection that this penny stock is a worthwhile investment.
If a penny stock is growing in percentage slowly and gradually then this is usually a good sign that the stock has good potential to triple, quadruple, or do even better. However, if on the other hand you see a stock rise quickly as soon as the market opens then it may be wise to sit and wait until it drops again or risk becoming the victim or momentary excitement that will die soon there after.
Many times a penny stock will jump in value early on and wind up plummeting back down to its original value, if not lower than what it was on opening. This gives the wise investor the perfect opportunity to invest in this penny stock and save yourself the risk of losing your investment from hyped demand.
Though many people criticize penny stocks as gambling, many investors have a change of heart if they find a company that shows amazing promise and happens to offer penny stocks as their only trading capacity.
Penny stock investing gives you the opportunity to experience great profits using very little initial cash, which is another major factor in what makes them attractive to beginners, who may be timid at first, in the world of trading.
As unpredictable and risky as they can be, penny stocks are attractive because of the excitement and possibility that you could choose a company whose stocks result in major financial gains for you, increasing your confidence as an investor hoping to achieve financial success.
It is certainly more realistic than playing the lottery if done wisely, and millions of people habitually spend money on lottery tickets. With penny stocks, your odds are dramatically better, especially since you have control over where your money goes. You can study the factors that make a certain stock attractive and then decide based on those factors whether or not you want to take the risk. Also, you can learn from mistakes and make necessary adjustments to do better on future investments.
By: Scott Johns
About the Author:
Scott Johns conducts research and analysis of stock market picks for a penny stock analysis company. To check out Best Penny Stocks and Picks for some of his company’s latest picks.