Oct 18, 2011

Posted by in Penny Stock | 0 Comments

The Simple Way To Make Penny Stock Fortunes

Making penny stock fortunes is easier than you think

Penny Stock FortunesMaking penny stock fortunes is definitely possible. Most people say you should avoid stocks for under $1 because “they are too risky”. The truth is, every investment has some degree of investment-penny stocks included.

The truth is, if you do your research, you can take about 90% of the risks out of play. There is a reason that some traders keep making money consistently year after year, and it is not luck. The reason is, they have proven systems they use to consistently find profitable investments again and again. Sure, they are a bit time consuming to implement, but if you are willing to do the work (unlike most penny stock traders) you can become very wealthy with this field.

There are a few things that are important to look for when investing in penny stocks. One of the most important is to analyze the company’s financial statements. This is something that many investors simply “do not have the time” to do in their haste to make penny stock fortunes, but it is very important.

 

Find penny stock fortunes by researching financial statements.

Being able to read a company’s financial statements (i.e. income statement, balance sheet, etc) is critical to discovering the health of the firm and ultimately making penny stock fortunes. In particular, pay close attention to the company’s profit margins, cash flow and debt levels. All three are important components to look at.

For instance, a firm might make a lot of money. However, if they will not see that money for a long time, and they have immediate debt looming, that is a big red warning flag. One thing you might want to do is look at the future outlook of a firm. This is an intangible that you cannot tell from simply looking at the firm’s balance sheet, but is very important nonetheless.

The way to tell this is to analyze the firm’s products or services, and compare them with their competition. This is why it might be prudent to only invest in industries you know a lot about. That way, you can accurately predict what challenges the firm will face in the future, and whether they are adequately equipped to meet them.

Also, make sure you have margins you will absolutely sell at no matter what. Having stop losses is very important. It might be when it hits 25-50% of your originally investment-only you can make that call. The important thing is that you have a set point you will get out at no matter what. The bottom line is, making penny stock fortunes is very possible if you are educated and know what to look for.

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