Saturday, January 25, 2014

How To Invest In Penny Stocks: Use Penny Stock Picking Services To Find The Best Stocks Under 5

By Remy Chikasu


Trading in penny stocks is one of the most rewarding ventures one can think of. Generally, penny stock trading is highly risky for beginners. It is important to learn how to find information on the best stocks under 5. You can choose to do your research; but many veteran penny stock trader subscribe penny stock picking services. However, there are some basic information about investing which one might consider in order to be successful. This article looks at some trading fundamentals you can use before venturing out to find the best penny stocks.

Stories abound of people who claim making a fortune investing in penny stocks. Regardless of these stories, it is a good idea to do your own due diligence before you start investing in penny stocks. Be aware of people who claim to have insider information or tips on hot penny stocks. This type of information could be from trashy brokers or dealers who are in the habit of pumping and dumping penny stocks. The effect of these schemes is to artificially increase demand and price for penny stocks. However, when the promoters stop promoting the stocks in question, you can be left holding worthless stocks. It is important to understand that not all the stories out there are true.

Different people normally write stories which are not true and they expect people to believe on the stories.

With the advent of internet you need to be extra careful with the tips you find online. It is true that you can make money with penny stocks; however, it is difficult for beginners to find the best penny stocks to invest in. Moreover, most of the stories are misleading hence it is necessary for you to carefully review such information before deciding to invest in a particular stock. Indeed, some tips will come your way by email, and there are several tips which are normally available online. Learn to distinguish credible tips from untrue information.

Generally, bad brokers and dealers prey on people who lack information particularly on penny stocks. Information on pen stock is hard to find because most micro cap stock companies do not file periodic reports like the blue chip stock companies. Therefore they will take advantage of those who may be ignorant and cheat them to buy the stock. It is therefore advisable to always avoid all the tips you find. The duration of making the sell is another important issue worth noting. There are people who normally take long before making the sale.They normally wait for the prices of the stock they bought to go high is when they sale.

There are opportunities to make money if the price of the stock is going down. If you buy back the same number of shares at a lower price that the price of the short sale, you end up with a profit. However, if the price rises very quickly, you may be forced to liquidate your position in order to cover the short sale at a loss. Naturally, there is a greater risk in short selling if there is a sudden change in the price. Conversely, there is low risk if you go long, meaning you anticipate rise in the future. The risk is lower than short selling because you will be in a position to see the movement in the prices. That way you can focus on the stock with high and low prices.

You need to look for stock trade in more than one hundred thousand shares in one day. If you take one with low volume, it may be very difficult for you to change your position. Therefore before engaging on any stock, you must consider their volume first. If you decide to engage in penny stock trading, you can save money and time by joining penny stock picking services.

Those that sell long are recommended on the other hand because even if you were to make loses, the losses will not be as much as it is in the case of those that are selling short. It is advisable to consider only stocks with high volume as compared to those with low volumes. You need to conduct your own research and find out the volumes of the stock. Those that are capable of selling more shares in any given day are the ones which are recommended.

It is also recommended that beginner should consider trading in small position. When you are starting, you are likely to make mistakes. These mistakes may make you to incur very huge losses. It is therefore good to start from a small position then grow. These are the recommendations to consider before venturing in trading best Penny stocks.




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