Investing in penny stocks holds great potential for many people.
Unlike bigger, more long term stocks, penny stocks can double or even triple in a very short amount of time.
This can mean big gains if you know what you are doing.
The difference between success and failure investing in penny stocks is in one of the most over looked aspect of investing, the research.
The Most Overlooked Tool in Investing Many people simply watch T.
V.
shows that claim to be giving away insider secrets or just go on the recommendation of friends.
Doing this is not bad, but you should always know everything about a company before you invest in them.
Before I invest in a company, I look up who their CEO is.
I also look to see what other companies he has work for to see if he has done a good job.
I look for any documents I can find that talk about the company's future plans and goals.
I do not stop there.
I also look at the trend of the industry.
If the whole industry is on an upward then that means the company I am looking at has a good chance of rising.
Don't Lose Money for No Reason! Another thing many people do not do that cost them a lot of money is having an exit point.
An exit point is when you give yourself a percentage gain that you are going to sell at.
Where people mess up is there stock starts doing really good and they want to ride it to the top and make more money.
What ends up happening is that they do not get out at the right time and end up losing money when they had the perfect chance to sell with a good gain.