How to Profit from Penny Stocks part 2.
From: www.PennyChase.com
1. How to make a profit in penny stocks.
First of all, think about why penny stocks have been considered risky. It is because they are thought to be unpredictable. The same volatility that makes them attractive as investments naturally correlates to increased opportunity for loss as well. You might put all of your money into a penny stock just before it falls 50% without warning. This scares most people away. The essential thing to look for in a penny stock is a trend in its stock price. This is very simple and most investors overlook it. All you have to do is find a trend, or pattern, in a stocks price of the past year or two. If you can find one of these trends, then you have found a predictable stock!
• Here’s a tip: Check out Nicholas Darvas’ books on stock trading for profit. These are some of the most widely read books on investing of all time. They will teach you more in one sitting than listening to any so-called professional can.
Also figure in pricing factors. Depending on which broker option you decide on, most pricing factors will remain constant whenever a trade is made. The spread (the difference between the buy and sell price) is pretty much a built in loss incurred whenever you buy a share of stock. Spreads for penny stocks can range anywhere between 25 to 100 percent so you definitely want to know what amount of spread you’re working with when figuring profit margins.
Another factor to consider with penny stocks is that there are two bidding prices and two asking prices for each stock. The inside bidding and asking prices are the lowest prices. The outside bidding and asking prices are the highest. It also helps to ensure that the stock you are researching has a high average trade volume. The more daily trades a stock provides, increases the opportunities to move in and out of the buy at an advantageous price level. What a high average stock trade volume does is make the stock price stay true to its trend so you may take advantage of it.
These simple tips on how to profit from penny stocks are more powerful than you may realize. These are often overlooked or not used by a majority of investors and can give you that edge you need to really make money in these stocks.
2. Penny stock selectors
Ok, first things first, there are a million so-called experts on the internet claiming to be penny stock experts. Don’t believe more than a handful of them. Most of these operators have just piggybacked onto a scheme to defraud unwary investors of fees to sign up for their newsletters. Worse than that, are the ‘pump-n-dump’ houses that use the web to generate interest in stocks they own shares in, than they dump these shares on the markets until they become worthless. Finally are those people who simply are not very good at what they do. These poor souls are probably the most pitiful because they actually think they are passing on good investment advice, and yet their stock pick’s prices continue to fall.
Keys to finding a good Stock Picker:
• Look for verifiable proof. Try researching various outlets to see if you can find unbiased reviews about a stock selector’s past recommendations. Stay away from articles written or sponsored by competitors, they are just trying to drum up business by trashing the competition.
• Check out a variety of sites. Just like anything else, do not necessarily go with the first option you find. It pays to shop around for investment advice just like anything else.
• Don’t let the price fool you! Some very highly priced stock picking services are not worth the paper their trash is printed on. Just because the website looks professional, does not mean the picks are! Some of the lower cost services and even free picks have produced incredible results over the long run.
• Remember, those professionally done sites cost a lot to make. Ever wondered whose money paid for it?
3. Penny stock brokers
The broker’s primary role is to serve as the vehicle through which you either buy or sell stock. E-trade, Zecco, Scottrade, Merrill Lynch, and many other organizations that can buy stock on your behalf. Although you can buy some stocks directly form the company that issues them, to purchase most penny stocks, you will still need a broker. Although the primary task of broker is the buying and selling of securities such as stocks, they can perform other tasks for you, including the following:
• Investment advice and grading
• Resource allocation and trading strategies
• Provide forums to interact with other like minded investors
• Clearinghouse for your trades (getting them placed)
Fees and commissions charged by online trading companies could jeopardize any profits made by the client. Before choosing an online broker company, it is important to study in detail the fees and commissions charged by the companies. If the volume of trade is small, a discount trading company which charges low fees and no commissions is the only way to go. Other than that, you will end up paying out your profits in fees.
Think about it like this, if you invest $500 in a stock and it increases 10%, you have made $50 profit, right? Well if you have $7-$14 fees to top of that trade, buy and sell, now you have only made $22-$36! See how fees can add up for smaller trades….
The account balance required to sign up with the trading company is also a consideration because the balance should be within the budget of the trader. If you are only interested in making trades of less than $1000, do not sign up with a brokerage house that expects you to maintain $5000-$20000 balances in your trading account. Leave those accounts to the bigger intuitional investor and administers of you 401K.
4. Use PennyChase.com for further research
Thank you for taking time out to research penny stock investing with PennyChase.com. We hope to provide you with continuing profitable advice on your journey to penny stock riches. Please contact us at (info@PennyChase.com) if you have any further questions or comments about this E-Report. We hope you have found it useful and informative.
And remember, it’s going to be a wild ride, YOU’RE ON A PENNYCHASE!
Thank You Very Much!
T.J. Penny chase
Ps. don’t forget to check out PennyChase.com for investing tips, online business opportunities, and internet based MLM companies.
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