subject: Play Before You Pay [print this page] Some of the best advice I have ever received about penny stocks was to play before I pay. This simply means to test out the market before you throw all of your money into it.
This is especially great advice for first time investors to learn how the stock market works and how to buy affordable stock that will make you a profit.
This can be done without investing any money at all and one can discover the market trends by simply watching and experimenting with them using a mock portfolio.
First of all, choose a dollar amount you are willing to invest in the stock market and in affordable stocks in particular. This amount can be very small, or even a little larger, depending on how much risk you are willing to take.
Remember that even though you are not immediately dispersing these funds into the stock market it is better to be realistic. If you only have a few hundred dollars to spare, then don't make your target dollar amount to invest too high.
After choosing a dollar amount, find a site that will give you a breakdown of penny stock prices, and the history of those stocks. It is imperative that you don't just pick any random stock because it costs $.03 a share. Research the activity of the stocks you choose during the last week and if possible in the last year.
It may be smart to pick affordable stocks in areas such as upcoming technology or new businesses. Investors who paid mere dollars for Wal-Mart stock in the late 1960s are now making multiple millions per year.
Remember that this is a rare example and only happens in a select number of instances, so do not count on this. After researching the history of the particular technology or company you choose to investigate, make a decision on which would be the best to invest in during your mock investment period.
It is also important to set a time period for your mock portfolio so that you can get an accurate reading of the market, and put your money in when it would be the most profitable for you.
Let's say that you choose to watch the market for two weeks before putting actual money into it. Over those two weeks it is extremely important for you to watch your chosen stocks every day. It may seem a little tedious at first, but it will help you gain a bigger payoff in the long run.
Go to the same website you "bought" your stocks from and check the current price of stocks every morning, and if you are serious about it, every night as well. This will help you know when to "pull out" or when to "invest more" in a certain penny stock.
You can reallocate your funds to different stocks by buying and selling as the market changes over those two weeks. Keep track of your money made versus your money invested. Make sure the mock changes you are implementing are helping you make money versus losing it.
After you are satisfied that you understand how affordable stocks work, you may start investing real money. Help yourself by keeping constant daily tabs on your penny stocks so that you can make money when there is money to be made. Happy investing!
by: Terry Daniels
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