Posts Tagged ‘penny stocks trading’
Where To Buy Penny Stocks
Written by troy on Friday, April 16, 2010 | No Comments
Categories: Penny Stock Articles, Penny Stock Investing, Penny Stock Trading Tags: buy and sell penny stocks, Buy Penny Stocks, discount online broker, full service brokerage, penny stock recommendations, penny stock trader, Penny Stock Trading, penny stock trading strategy, penny stocks, penny stocks trading, Where To Buy Penny Stocks
I often see the question asked “Where to buy penny stocks?”. There is no special place to buy penny stocks per say. You can do it with a full service broker, a discount online broker or with a company such as Charles Schwab that is sort of a mix between the two. Any of these types of brokerage companies will be able to execute your trades for you. However, what is the best place for you to buy and sell penny stocks?
The most ideal way for you to begin trading penny stocks is to open a online discount brokerage account. It only makes sense. A full service brokerage house is going to charge you more (in many cases a lot more) for your stock trades. They charge you more because you have a dedicated broker who is there to help you work your account. This broker is supposed to help guide you through the pitfalls of investing and to use his/her expertise to make you money. A full service broker is there to make recommendations to you. However, they are not going to recommend buying penny stock. Those recommendations are going to have to come from you. Since this is the case I see no point in paying extra commission for a service that they will not be providing. If you feel that your full service broker offers other value that you don’t want to miss out on then by all means use them but I wouldn’t use them. I used to be a broker with one of the countries largest full service firms. In fact, they were number two at the time behind Merrill Lynch. We would never have been allowed to recommend penny stocks to our clients for fear of customer complaints and the fear of losing an arbitration hearing should the customer complain.
I believe that online penny stock trading is where it is at. Open an online discount brokerage account with a reputable firm. You can use Ameritrade, Scott Trade, Fidelity, etc. It is not necessarily important who you use since most of them will offer similar services. Deposit your money into the account and then begin penny stocks trading. You will make your own decisions.
I know that some of you are uncomfortable right now with making your own decisions. However, this is extremely important. You don’t want to spend time and money for someone else’s penny stock recommendations. You can never be sure why they are recommending the stock. However, when you adopt your own penny stock trading strategy you will know the specific reason why you chose to enter or exit each and every trade. You do not want to be dependent on other people for your trading decisions. You can successfully make your own trading choices.
So now that you know where to buy penny stocks get an account opened up, deposit your money and continue to hunt around this website to find the information that you need to make you a successful penny stock trader.
Fundamental Research vs. Technical Analysis
Written by troy on Friday, December 26, 2008 | No Comments
Categories: Uncategorized Tags: fundamental research, Penny Stock Trading, penny stocks, penny stocks trading, technical analysis
What is more important when trading penny stocks: fundamental research or technical analysis? I use technical analysis primarily and only use fundamental research to narrow down a choice of candidates that I have been following.
Remember what we are trading. We are trading penny stocks. That being the case, we will not find too many candidates that will stand out to us using fundamental analysis. The reason that the stock is trading at less than $5 is because there is not something too promising with the fundamentals of the company. It may be merely a difficult time that a company is going through but despite how much you research the stock or the marketplace you will not get the real picture.
I have watched a few sites over the years that attempt to apply fundamental research to penny stocks. It is almost humorous. I have been impressed with some of the research that they have put out there. It has been good stuff. Sometimes it has been so good that it almost convinced me to trade the penny stock myself, however, ultimately the stock languishes again. I have seen some of the greatest fundamental research write-ups on companies that are now defunct. And frankly I could care less. I believe fundamental research on penny stocks is a loser’s game. It will not lead you anywhere positive.
I prefer technical analysis. I am talking about breakouts above trendlines, moving averages, moneyflow, relative strength, stochastics, MACD, and the like. I find that techincal analysis is much more beneficial when it comes to penny stocks trading.
Technical analysis is sort of a measure of whether a stock is in favor or out of favor during the particular time frame that you happen to be watching for. It does not give you an indication of where the stock might be going 6 months or one year from now. It lets you know whether the stock is in favor right now. And simply put if it is in favor right now then I want to trade it. If it is out of favor then I want to stay away from it or short it. As an aside, I work in the investment industry and the SEC is beginning to get tougher with short sale rules. As a result of this I would spend most of my time looking to go long in the particular penny stock that you might be trading. I think it may be hard for many brokerage companies to come up with the physical shares of the company to short. The SEC is starting to require that the brokerage company locate the shares.
If technical analysis indicates that a company may be in favor at this time then it becomes a penny stock trading opportunity. I would stay in the trade for as long as the technical indicators are in your favor or exit the trade according to your trading rules that you have set up. When you have exited the trade you can always look to re-enter the same stock for yet another trade or move on to another penny stock to trade.
Below is a chart of BRCD (Brocade Communications) over the last month. Take a brief look at how the stock drops to around $3 and then rises again to at least $3.30 again.
BRCD - Last Month
Three different times in the last month you could have bought near $3.00 and then sold again at $3.30 or higher. And if you will look at the far right of the chart you will see that it is there again. Maybe it could be a buy again. Watch it over the next few days and see what happens. Learn technical analysis and put it to work in your penny stock trading.