Penny stocks, also known as micro-cap trading, are stocks that trade below $5.00 on stock quote sheets, outside the major trading networks. Penny stocks are highly speculative, offering investors an opportunity for big profits and big losses. Penny stocks are subjected to less rigorous filing and disclosure standards, so identifying legitimate penny stocks can be challenging for even the most seasoned and savvy investor. |
In order to find awesome penny stocks, you should follow the same principles of more traditional stock trading. First, engage in some due diligence. Research the company’s business model, financial stability, and liquidity. While no one can predict the market, you can identify certain market trends and the potential for growth. The same high yielding growth area traditional investors are pursuing will also work for penny stocks. Technology, electronics, and backend platforms could be big growth areas for penny stocks in the next year. Talk to other penny stock investors and discover what stocks and companies are making them money. Many penny stock trading websites offer access to some of their most successful and aggressive investor’s portfolio, so you can see who’s actually putting their money where their mouth is. Chat rooms and discussion forums are fantastic opportunities to get feedback, advice, and opinions from other penny stock traders. Without the benefit of a broker, you’ll need to rely on your own research, conversations, and intuition to make a profit in the penny stock market.
Penny stocks are an attractive option for investors who can handle some high risk. The limited liquidity, size, debt, and less than full disclosure about the overall finances can make the trading of penny stocks a roller coaster. Since you will be buying and selling a large number of stocks, you need to be clear on what your profit and loss strategy is. Be sure you have an explicit and well-defined stop order, so you can get out of the stock if the value begins to fall.
Penny stocks are not regulated as closely as traditional stocks. Make sure you know exactly where you are putting your money. Ignore or pay little attention to investment advice and stock recommendations you receive via email, Facebook or Twitter. Do your own, unbiased research before investing. There are a number of online websites that provide research on micro-load stocks, but be wary of advice from message boards and blogs, where writers may have been compensated for their work. There are a number of websites which provide a daily hot sheet of tips. Use these recommendations to identify some awesome penny stock opportunities. You can learn a lot from where your peers and colleagues invest their hard earned money.
To create an awesome penny stock portfolio, be sure it is diversified. Invest in a number of different companies, keeping your investment in each company at less than 20%. Losses and gains can add up quickly, so keep on top of your portfolio. Being a successful penny stock investor takes discipline and research, but if your committed, you can expect a high yield on your investment.
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