Investing in Penny Stocks
The (SEC) Securities and Exchange Commission have determined that penny stocks are "speculative" or RISKY investment.
That being said they are popular among seasoned and novice investors alike because of their large money making potential.
Something you should understand about Penny Stocks is that stocks trading for under $5.
00 a share are considered "penny stocks"...
and since the stock market crash of 2008 there are many stocks that fit that criteria.
Locating penny stocks to invest in will require a little work on your part.
First let me say there are plenty of penny stock newsletters that promote "the latest hot penny stock" honestly,some of these are good but most are just hype and when you invest in these without further research you will probably end up losing your money.
As an investor myself some of the best advice I received is to make a list of the stock or stocks you want to invest in..
...
you can do this on your computer,through your online brokerage account or even on Yahoo Finance..
...
make your list and watch the stock for a month or two to give yourself and Idea of how the stock is reacting to the markets.
Many times we get excited and just want to jump in and make our profit...
each time I've done that I've lost money because I bought at the top of the hype rather that taking a wait and see approach...
trust me if the stock is that good there will be room to grow with it and be profitable.
Too many investors see the potential for doubling their "nest egg" and buy as many shares of a stock as they can.
This approach is OK if you are in a position to lose that money and not affect your income or budget.
Otherwise it's more frugal and wise to slowly build your position in a stock over weeks or months.
Another consideration is your research.
Where do you start? Well you can start with your Broker,or your online brokerage account or Yahoo Finance.
Yahoo Finance is a free source and provides a wealth of information for even the most savvy investor.
Many dramatic moves in the top penny stocks are the result of promotional activities, often referred to as "pumps.
" "Pumps" are the hype to get people to buy into the stock..
...
then as soon as it gains momentum they "dump" it or sell it for a fast profit.
Again this is where your research comes in...
are they trading just a few hundred shares or are thousands of shares trading daily for the stock you have selected? Also you may consider the time of the day that you trade.
Usually the market opens either to the up side or the down side...
those gains or losses at these peak times can result in a profit or a loss in just a few minutes of time.
There are different methods of buying and selling stocks.
There is the investor who generally is in the stock for the long haul and the trader who may be trading monthly,daily or weekly for immediate income It's important for you to determine which you are or want to be.
This will help you define your portfolio and trading level.
As a Penny Stock trader you may be influenced by many factors,a stock tip from your good friend, an article in a newsletter,TV,the internet,the newspaper.
All of these "tips" may not be bad but you need to do your homework to make sure you are not buying into hype or at the top of a bubble that is about to burst causing you to lose all you investment.
Let's face it we all would like to buy a stock at 0.
02 Cents and sell it for $100.
00 or more and hey those opportunities still exist.
We just want to approach our investments with prudence and optimism.
That being said they are popular among seasoned and novice investors alike because of their large money making potential.
Something you should understand about Penny Stocks is that stocks trading for under $5.
00 a share are considered "penny stocks"...
and since the stock market crash of 2008 there are many stocks that fit that criteria.
Locating penny stocks to invest in will require a little work on your part.
First let me say there are plenty of penny stock newsletters that promote "the latest hot penny stock" honestly,some of these are good but most are just hype and when you invest in these without further research you will probably end up losing your money.
As an investor myself some of the best advice I received is to make a list of the stock or stocks you want to invest in..
...
you can do this on your computer,through your online brokerage account or even on Yahoo Finance..
...
make your list and watch the stock for a month or two to give yourself and Idea of how the stock is reacting to the markets.
Many times we get excited and just want to jump in and make our profit...
each time I've done that I've lost money because I bought at the top of the hype rather that taking a wait and see approach...
trust me if the stock is that good there will be room to grow with it and be profitable.
Too many investors see the potential for doubling their "nest egg" and buy as many shares of a stock as they can.
This approach is OK if you are in a position to lose that money and not affect your income or budget.
Otherwise it's more frugal and wise to slowly build your position in a stock over weeks or months.
Another consideration is your research.
Where do you start? Well you can start with your Broker,or your online brokerage account or Yahoo Finance.
Yahoo Finance is a free source and provides a wealth of information for even the most savvy investor.
Many dramatic moves in the top penny stocks are the result of promotional activities, often referred to as "pumps.
" "Pumps" are the hype to get people to buy into the stock..
...
then as soon as it gains momentum they "dump" it or sell it for a fast profit.
Again this is where your research comes in...
are they trading just a few hundred shares or are thousands of shares trading daily for the stock you have selected? Also you may consider the time of the day that you trade.
Usually the market opens either to the up side or the down side...
those gains or losses at these peak times can result in a profit or a loss in just a few minutes of time.
There are different methods of buying and selling stocks.
There is the investor who generally is in the stock for the long haul and the trader who may be trading monthly,daily or weekly for immediate income It's important for you to determine which you are or want to be.
This will help you define your portfolio and trading level.
As a Penny Stock trader you may be influenced by many factors,a stock tip from your good friend, an article in a newsletter,TV,the internet,the newspaper.
All of these "tips" may not be bad but you need to do your homework to make sure you are not buying into hype or at the top of a bubble that is about to burst causing you to lose all you investment.
Let's face it we all would like to buy a stock at 0.
02 Cents and sell it for $100.
00 or more and hey those opportunities still exist.
We just want to approach our investments with prudence and optimism.
Source...