Oct 13, 2011

Posted by in Penny Stock | 0 Comments

Follow This Penny Stock Advice And You Will Become Profitable

Be careful who you take penny stock advice from

Penny Stock AdviceThere is tons of penny stock advice online. Knowing who to listen to is not easy, and it is very easy to get overwhelmed with all the information (some of it conflicting). If you are overwhelmed right now and do not know where to begin, here are some simple tips to help you get started.

First of all, decide what your strategy is going to be-day trading or long term investing. If the former, then find a decent broker. Finding a cheap company is incredibly important if you are going to be making a large amount of transactions. After all, your average profit is going to be small, and even a tiny increase in price can be the difference between success and failure.

Also, be very cautious about what companies you buy as a day trader. Never take your eye off the stock price for more than a day at a time. This field is very volatile, and stocks can go up in smoke in an instant.

When searching for penny stock advice take a closer look at the business

If you are planning on buying and holding a company as a value investor, then you have to look carefully at the business itself-not just the stock price. First, compare their products compared with their competitors, and also look at their marketing. Find out about new products that are going to be coming to market as well. For instance, if the firm’s competitor is about to come out with a groundbreaking item that will take the industry by storm, it might not be a good time to invest.

Just remember this piece of penny stock advice-as a value investor, you are actually investing in the company itself-not merely the stock price. It is true that there can be discrepancies between the value of the company and the value of their stock. However, in the long run these will even out. Therefore, investing in a sound company is important if you plan on holding the stock for any length of time (more than a day or so).

No matter what kind of investor you are, have a bail-out price. There is no getting around the fact that penny stocks are volatile. Any small movement in price can be a big profit or loss.

For instance if you buy a stock at $.2 and it goes down to $.15, that is only a $.05 move in price. However, you just lost 25% of your total investment! Having a set point you will get out at is just as important as doing your research and finding a good stock.

The bottom line is that you can make money with penny stocks-it is not just the easy path to riches many people think it is. For the majority of investors, it is nothing more than gambling-except that they are putting money in companies instead of sports teams. However, if you are one of the few to really take your time and do your research before investing in a firm, you will become profitable. Follow this penny stock advice and you will enjoy long term success in this volatile but exciting industry.

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