Penny Stock Investing - How to pick penny stocks
Penny Stock Investing - How to pick penny stocks
Learning how to pick penny stocks that will increase in value can be very financially rewarding. Understanding the essentials of penny stock investing can bevery beneficial to you.
Before investing in anypenny stock, gathering information on the company that you are going to invest in.Finding great penny stocks to invest in isn't really that difficult but it does take time and effort and lots of research.
It is important to understand that when you are daytrading penny stock, these usually aren't stocks that you intend to hold on to for a long time. You are buying the stock to make a profit and sell. Penny stocks are usually micro cap (hence making them risky). This why the number 1 golden rule in penny stock investing needs to become embedded in your brain "NEVER fall in love with a penny stock" Also, I never recommend that you invest more than a few hundred dollars in one penny stock.
It is important to have a plan to as to when you are going to sell. Let's just say you buy 1,000,000 shares of a penny stock at .0004 and you sell it at .0006, that's 200 dollars profit. Think about it, if you had say 10 stocks at a time to play and was making that profit on each of them within a week or so. Think of how quickly your investment can grow? The concept of this is quite simple, finding those stocks is the hard part.
Research is key when it comes to penny stocks. You can make alot of money if you buy and sell wisely. The penny stock market is very volatile so you need to monitor a stocks trading history and volume. A good place to research is pinkseets.com. You can get alot of the company information and financials, outstanding shares and floats. You can also see the dreaded reverse split history.
What is a reverse split? A reverse stock split usually occurs when a company's management wants to raise the price of the stock. Basically, you end up losing some (if not all of your shares) Checking the history of the reverse splits on a stock is history. If they have a huge float, chances are they are going to reverse split sooner or later. They are ones that you want to avoid. Don't get greedy and don't be impatient. Set your buy and don't get impatient and raise it because it is not executing. Don't get greedy when selling. The more stocks you make a profit on, the more money you will make. Yes, there are those cases when a penny stock goes on a major run and yes, you can make alot of money but those aren't ones that you want to bank on. They are few and far between. The whole concept is making profit.
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