Most volatile penny stocks operate in a very fickle market. This is why a lot of people consider them to be high risks but potentially high yielding investments. Your penny stocks may be worth a literal penny each today, but it could easily balloon to a dollar or so tomorrow. Knowing when to sell your penny stocks need no further elaboration. Knowing when to buy penny stocks, on the other hand, needs deeper contemplation.
Buying The Most Volatile Penny Stocks
It is a gamble, you see, whenever you deal with penny stocks. But it doesn’t have to be a pure game of luck. Intelligent speculation is the key, and this should guide you whenever you re planning to buy penny stocks. You can magnify your gains on betting on futures through futures trading You have to do your homework. Research the particular market where the stocks you are eyeing do operate. Try to be on the lookout for the following factors before deciding to buy penny stocks:
* How fragile is the market? If it is a pretty stable industry, chances of a spike in value would be less.
* Who are the people behind the industry? The strength of a business lies in the people running it, just as much as other economic factors. Try to study the portfolio of the managing team behind the company before you buy penny stocks attached to its name.
* What has been the trading history of the penny stocks involved? Lessons can be learned by studying the trends posted by the said stocks.
* How favorable is the immediate future for the said market? This can be determined with a reasonable degree of certainty after considering the factors above.
Whenever you want to buy volatile penny stocks, you have to remember the basic rule in trading: sell when it is hot and buy when it is not. So buy penny stocks when their prices are low. Additionally, buy penny stocks when all indications point to a rise in value in the near future.
Indeed, it is that simple. You just have to keep these things in mind whenever you want to buy penny stocks. Better yet, you could assign a broker to buy penny stocks on your behalf. This would make things easier for you.
The problem with penny stocks, really, is the fickleness of the market, so you have to remain vigilant. Once you find some stocks at bargain prices with their outlook looking relatively bright, you have to buy penny stocks immediately because their worth might double overnight. The early bird always catches the worm, and this seems to be the rule of the thumb in a highly volatile market like penny stocks trading.
The Risks In Buy Volatile Penny Stocks
There are many rewards promised for anyone who wishes to trade penny stocks. Monumental gains have been experienced in a matter of hours in this field. Millionaires have been made out of people who have invested a few thousands. Success has been proclaimed by investors who have experienced substantial profit in this business.
But with every success story shared by those who trade penny stocks, there are stories of despair and frustration that can be shared by those who have experienced terrible losses in this industry. Whenever anyone would trade penny stocks, he is making his investment susceptible to numerous high risks, after all. And what are these risks, you might ask? Consider the following.
* People who trade penny stocks deal with a highly volatile market. Diligence is required because the value of penny stocks rise and fall in a matter of minutes. Miss that minute of glory, and chances are, your shot at gold would be lost forever.
* The word “penny stocks” is a misleading term. Each share may come at a low price, but you would usually trade penny stocks by the thousands. This means that you stand to lose more if your investment suddenly falters.
* Penny stocks are sometimes issued by less than reputable companies. There are even occasions when dummy corporations issue penny stocks so that they could earn fast from the IPO and thereafter disappear from public sight.
* The value of penny stocks is driven by hype. A few press releases here and there, a mention in a generally circulated newspaper, a full page ad in a leading magazine, and the value of the stocks would increase. But as with everything that is driven by hype, whenever we trade penny stocks, we would have to deal with the consequences that would result once the hype dies down. Will the penny stocks be able to stand on their own? Or will they sink so deep without the support of a marketing push?
* Those who trade penny stocks would also have to deal with this industry’s failure to make use of traditional stock charting methods. This would result in a lot of uncertainty about your dealings as well as the stocks themselves.
So how should you cope up with these risks when you trade penny stocks? This tip is as simple as it is effective: recoup your capital as soon as possible, then invest in new stocks using the profit you have earned. This way, when you trade penny stocks, you would only stand to lose what you have already earned and not what you have taken out from your original funds.
Simple Stock Tips Will Help You Earn Big Money
In these tough times with bank interest rates being quite low, if there is one asset class that can give you better returns, it is the stock market. Many of the top companies are listed in the stock market and as long as their performance is good, their stocks will appreciate. You can get the benefit of such appreciation along with other rewards like regular dividends, bonus shares and thus see a good return on your initial investment.
Essentially by buying shares of a company, you are buying a part of their business and as shareholders you get impacted by the company’s performance.
It is thus essential to pick and choose companies that are doing well already and whose future prospects are also looking good. Do not choose companies that have heavy burden of debt and you can find that out by looking at their balance sheets. If you fail to do this and go by mere hearsay, you stand the chance of losing a lot of money. Hence refrain from acting on tips and do your own due diligence before buying stocks of companies about which you do not have much information.
While everybody knows that you have to buy low and sell high, not everybody is able to time the market and make their moves. The stock market is influenced by various happenings in the country as well as in the outside world. This can push up or bring down prices of stocks and therefore as an investor you need to wait for time and be patient to make money in the stock market.
Yes, you can trade the market on a daily basis by following tips given by experts. However, be aware that this is a risky proposition and you need to be nimble with your positions to make money. Sudden fluctuations during the day can make you lose money and unless you have some hedging mechanisms, you will end up as the loser. The trick therefore is to make small profits, keep churning quickly so that you are able to maximize your gains.
This online stock trading is a convenient way to make money as long as you take informed decisions. Choose a broker who can give you tips and advice as well as somebody who charges you the lowest brokerage. You can pick up valuable strategic inputs from such experienced brokers during discussion after market hours and take advantage of such leanings.
There are also other articles you can pick up from the internet about trading strategies which will help you to trade better and improve your chances of making money in the stock market.Stock tips are good provided they are backed with some fundamental strength and research as only such tips can be relied upon.
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