Finding good penny stocks is like finding a needle in the haystack. Why? It's simply because penny stocks are a dangerous commodity. With the so low prices, even a very small fluctuation in their price can either double your investments or cut them in half. Penny stocks are among the most volatile and variable investments in the stocks exchange. Companies listed usually have not history of stable or solid fiscal performance. You have to know that low-priced stocks can also be manipulated by some stockholders for their own benefits. Thus, you should know the risk level before you decide on trading in penny stocks.
Find good penny stocks - Do Your Research
A very good way to find good penny stocks is to conduct a research on the background of the penny stocks you would like to invest in, and get rid of those penny stocks with poor indicators. Exert some efforts to remove the stocks not traded on any of the major US stock exchanges. You should also not consider corporations with less than $10 million in their annual cash. You should also determine the operation of the company and if you don’t understand their industry, then leave that penny stock behind.
The next thing to do is to decide on your investment. Go for firms that consistently make cash. Firms that show increased or improved free cash flow over several periods are good penny stocks. Choose the over those firms that show high debts that need to be returned. Compare the book worth per share against the price of stock instead of following the cost of stock share blindly.
When you think you have the good penny stocks on your list and are prepared to invest, it's time to open an account so you can buy penny stocks. You can find many online brokers that offer diversified services only at affordable commission rates. It is a wise move to diversify your investments among different firms for a reduced risk.
Limiting your penny stocks orders will allow you to avoid the big or huge changes in the prices of penny stocks during your order placement. Keep in mind that penny stocks are such a volatile commodity and the prices may have significant difference. Limiting your orders will help you manage this volatility well.
Here's how to know the good penny stocks to buy:
1. Follow good penny stocks leads from professionals. You'd only be wasting your time in researching from the scratch. You can get a good penny stocks list from the research of professionals and confirm them through your own research.
2. Look out for good penny stocks that trade in big volumes because these stocks surely have a consistent high volume of shares; thus, they provide a good rate of return.
3. Good penny stocks should have an improved buying and selling history. These stocks should also increase in value even for a short time. As a matter of fact, good penny stocks can give you doubled investment overnight.
4. Consider microcap stock of companies with not so many competitors because they have the advantage of high demands compared to companies with high competition.
5. Companies with high demand are better.
6. Stocks of companies with any form of illegal or unethical behavior are not considered good penny stocks.
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