Mar 25, 2012

Posted by in Penny Stock | 0 Comments

Tips For Profiting With High Volatile Stocks

High volatile stocks are in high demand

The high volatile stocks are something a lot of traders are searching for, because they are generally thought to be the most profitable. Also, some traders just like living life on the edge. These stocks can produce huge increases or decreases in a matter of 1-2 days. Obviously you have to accept that with the potential rewards are possible risks.

The key is knowing what you are searching for in high volatile stocks

Remember: at their most basic level, stock prices are determined based on supply and demand. This is obviously an overly simplistic model, and there are many variables that affect both. However, by and large the key is finding stocks that have lots of demand and low amounts of shares outstanding. The smaller number of shares outstanding there are, the better.

Generally the high volatile stocks that will offer the biggest potential short term gains will be priced anywhere from $2-10. These are more stable than penny stocks, but still offer the profit potential of those companies. Try to find ones that have high trading volumes, such as 50,000-200,000 per day.

Once you have a group of high volatile stocks with small amounts of shares and high demand, now you want to look for daily percentage gain. If it has risen 10% or greater in a single day in the past, you know it has the chance to do this again in the future. Of course, do not just assume it will do so again. Make sure you find out the reason it grew so much in the past, and see if there is potential for it to rise like that again.

Check the stock chart, and try to find stocks that have not rallied a lot recently. If it has, it is probably due for a crash. If you are looking for a slightly longer term investment, then try to find companies with quality management. Generally low priced stocks are there for a reason. However, if a firm was just taken over by someone with a reputation for turning companies around, they could still be a good long term investment.

Conclusion

Low priced stocks can either make you gain or lose a lot of money in a hurry. Use these tips, and you will greatly increase your chances of making money with high volatile stocks.

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