The beautiful part about penny stocks is they are so simple to understand. It is always important to fully understand how they work prior to making any investments. What are penny stocks? It is a stock that costs less than five dollars per share. The share amount is solely based on the market value of the penny stock. They have a market value usually less than $200 million dollars. It is called a penny stocks because you can buy shares for under a dollar.
What are the risks in trading penny stocks? Just like a regular stock, there are risks in penny stocks too. A wealthy corporation or person can manipulate Penny stocks. You must watch out for the scams involved with trading penny stocks. One scam focuses on the less experienced traders, it’s called the pump and dump. This occurs when there is a big drive to get people to buy a particular stock. The con artist starts dumping all of their stock and massive amounts of buying is taking place in the market. Once the con artist sold all of their stock, the price will drop rapidly. Unfortunately, scams are very common in the penny stock market. You must learn how to avoid them at all cost.
If you do not have a lot of penny stock experience, buy short-term stocks. It is too risky to hang on to penny stocks for years. Long-term stocks are much riskier. Companies that can get fresh information about penny stocks that no one else on the market has will have a very good clientele. People will go for the company that provides more information about their stocks.
You will need to find a reliable penny stocks newsletter and alerts. It should give you great tips on penny stock strategies and good investment advice. You will need a newsletter that will have real-time alerts and a great reputation in the market. Make sure the newsletter is from an experience trader with strong penny stock knowledge. You will need a newsletter with good penny stock trading tips and guidance.
The worst thing you could be is an emotional trader. You will need to open your mind and trade based on knowledge about a stock. Leave your emotions outside of the trading market. It is important to be disciplined so you can place a trade at the right time. If you get a good tip on a penny stock and you reach the target price, sell the penny stock. Don’t get too greedy and hang on longer to the trade. You could ultimately turn a success into a loss. Do not invest all of your money into one stock. Invest in a few penny stocks this will even out the risk.
Many penny stock web sites will have a hot stock list that changes each day. You should get in the habit of looking at several penny stock web sites and look at the hot list for similarities. Another place to look for hot penny stocks is the message boards or forums. You will be able to read through the post and see what people are saying about a particular stock. You can also go to Penny Stock Finder and look at all of the hot stocks in one location online. It will instantly tell you the exact hot penny stock for the day.
Traders find that PennyStocks123 is a great place to find the best hot picks and relevant information. If you want to know more about a stock just select the symbol link and education yourself about the penny stock. Select certain penny stock traders and see what they are saying about a stock. You will need to develop your own daily routine prior to placing a trade.
How do you pick the hot penny stocks? The market is always changing and it is not easy to tell you what is hot at the moment. If someone tells you that one particular stock is always hot, don’t take any advice from them. If that information were available everyone investing in penny stocks would be rich. There is no set way to determine what is hot all the time. You must read the newsletter and check hot lists every day, this can’t be stressed enough.
A very good penny stock trader is always on the lookout for the hot stocks. They will also try to buy at a certain target price. Penny stocks are a very fast paced market and there are opportunities to trade all day. You really can’t plan out your stock plans in advance. You will need to study the market each day and determine which stocks are active. Read your newsletter and see which stocks are worth looking at and educate yourself first before investing. You can also seek the advice of an experienced trader too.
Many investors will go the some finance web sites for stock information. You can also use a stock screener to generate certain information about a penny stock. Many experienced traders will gather information about the market cap, share price, profit, revenue and price earnings. The stock generator will tell you the hot stock in the market at any given time. Before placing a trade on a hot stock, check the charting and market trends. Does the penny stock still have potential, or is it no longer hot?
When you are trying to decide which stocks to invest in just look at the hot sector. A penny stock that is bullish and moving in a steady trend is in the hot sector. A favored sector penny stock is one that is currently moving strong in the market.
There are bullish sector stocks that have the potential to have some gains in the market. A penny stock for auto parts may be rising and outlook is positive. There is room for huge gains in penny stocks like these.
Always look at a company’s balance sheet. Many companies have racked up debt and made minimal profit. In this case the risks are higher. If businesses have a lot of capital and some debt the risks are lower. You could also look for a company that has a great amount of profit and very little debt.
Learning how to read a chart in penny stocks is a must. You will need to know how to look at past performance to get the full picture about the stock. You will be able to see similar pattern in the past, which could indicate present performance in the penny stock. The more long-term charts are better because you will be able to go back a few years. If you do not fully understand charting, just look for an online seminar or download an e-book online. Indicators do occasionally fail, but you will have more success if you know how to use them properly.
You may not know a hot penny stock in advance, but there are still ways to figure out a potentially profitable stock with indicators. Try to use multiple indicators instead of relying on just one. You should be able to view all of the indicators on one screen. It is best to analyze each indicator and make sure you are getting consistent information before placing a trade. If you are a beginner, you’ll have to study each indicator before placing a trade. When you notice all of the indicators are showing an upward or downward trend, this is the time to place a trade.
The Strong Price Movement indicator will give you information on a stock that is trending upward and starting to gain momentum. You may have to observe a penny stock over a few days to determine a changing trend.
Technical Analysis Indicator provides a way to give insight about a penny stock’s future performance. You will have to go back a look at the stocks past performance over time. A great technical indicator is MACD Moving Average Convergence/Divergence. MACD will tell you what direction a stock is trending up or down. This indicator will tell you when changes occur in the moving trend. It uses parameters in a 12,26,9 ratio. It is good to use MACD with a moving average indicator. It is believe that if the moving averages rise above 50 day, it could potentially move to 200 day.
Many people trading penny stock heavily rely on indicators for watching hot stocks. Remember indicators are not full proof. A quick change in the market can cause them to fail from time to time. If you are a beginner, start with a penny stock demo account before going live. This will also give you the opportunity to practice trade hot stocks and get to know the indicators too. Never start with a live account first. You must educate yourself and get a familiar with how the market works before placing your first live trade in penny stocks.
