Understanding how penny stocks work requires you to know stock market basics. It’s ill-advised for anyone to try and invest money if they don’t have a firm understanding of the basics. Starting with penny stocks can be risky if you don’t fully understand how to invest in stocks and more importantly, which stocks are the right stocks to buy now.
Penny Stocks for Dummies is a great primer that will allow novice investors to get a firm grip on the basics and help advanced investors learn new tactics.
Let’s see how this book can help.
Start With Penny Stock Basics
The perfect place that includes everything an investing for dummies course would include. This is the very first part of the book which is comprised of four different chapters. A few of the major points discussed here include:
- The basics of penny stocks. This is where you’ll understand exactly what penny stocks are and why you should consider buying these low priced stocks.
- The deciding factor. A good look at choosing whether or not penny stocks are ideal for you. After all, these stocks are volatile and not everyone can afford to invest money into stocks that provide little security.
Following these very basic points, you’ll come across the actual buying process. This explains buying shares and how you can go about selling stock. A lot of terminology will be learned in this chapter as well as a firm understanding of all the different markets. Even the Toronto Stock Exchange and other international exchanges are discussed.
Chapter 3 is invaluable because it looks at the perspective of the business owner. You’ll understand stock splits and how the stocks truly work.
The final chapter in part 1 will go through avoiding scams and promotions. Do you know the difference between penny stocks to buy vs penny stocks to watch? If not, you’ll learn it in this chapter.
Stock Research and Investing
The second part of this book is all about research and investment strategies. This is where you’ll learn how to keep it simple and reduce or eliminate your risks when trading.
Before your first trade, this chapter will prime you on what to expect and what you need to know before sinking any money into penny stocks.
A few of the great points covered in this section are:
- Choosing brokers
- Bids, asks, market orders and various other order types
- Investing versus trading
One of my favorite aspects of part 2 is that you’ll learn how to properly research the stock before buying. You’ll learn where to research, how to call the company, what questions to ask and how to perform corporate analysis.
If you want to learn how to eliminate risks and pick a true winner, this is the section to read. You’ll even learn about stock scanners and how to choose your stock without a scanner.
Trading Penny Stocks
After 137 pages, you’ll come across how to trade stocks. This is not the basic, rudimentary aspects. Rather, this is where you’ll learn all about strategies, such as:
- Scaling
- Averaging
An in-depth look into limiting losses, and understanding when to hold and when to sell is then covered.
Further analysis is then covered wherein you’ll learn about financial reports, what numbers to pay attention to and how to read news releases. This is where an investor will be able to tell if potential oil stocks are a high or low risk through fundamental analysis.
Chapter 10 is where things get very, very interesting. This is not your average chapter, but a true look into comparing financial ratios. Inside this chapter, you’ll be able to uncover liquidity, activity, leverage, performance and valuation ratios. These are the ratios that really dig deep into analyzing a stock.
If you wanted to go well beyond the basics, chapter 10 is where you’ll go from novice to really breaking down a company’s financials.
The final two chapters of part 3 go more in-depth with analysis and determining if a stock is ideal for your portfolio. Bottoming out patterns, price dips and spikes, moving averages and more are covered.
The Part of Tens
After part 3 of Penny Stocks for Dummies, you’ll know more about penny stocks than the average trader. Implementing the first three parts will lead to success in itself, but part 4 really puts everything into perspective so that you can start trading with the utmost confidence.
This part is all about tens.
- 10 tactics for rapid results.
- 10 truths about trading, such as rise and fall and making up losses
- 10 considerations for companies.
These parts of 10 pretty much cover any questions you’ll have left before buying shares. Whether you’re a trader or you plan on selling stock to raise capital for your business, this book will help you master the art of penny stocks and do so while minimizing your risks.
Peter Leeds, the author of Penny Stocks for Dummies, truly goes into great depth in this book. Peter doesn’t leave anything out; even the bad is included. You’ll understand why many people run the other way from penny stocks and why some people have been able to retire very early because they made a killing trading penny stocks.
If there was one book I would recommend for beginners, it would be this one.
