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Friday, April 26, 2013 11:15:38 AM
Penny Stocks Do's & Don'ts
Penny stocks can also be extremely risky if you don't know what you are doing. Golden rule: Never fall in love with a penny stock.
Penny stocks are risky and require research. Alot of the companies trading penny stocks have limited information and history. Often they are just shell companies. A shell company is an actual company but does not have assets or actually do business.
People are attracted to penny stocks if there is so much risk involved. The reason is simple- there is alot of money to be made if traded correctly. Penny stocks can run up real quick- Often this is done by pump and dump schemes. This basically means a bunch of people get together to promote a stock with false expectations of what company is planning to do etc. They feed investors a bunch of fluff basically. They run the price up, sell the stock than dump the stock. This leaves alot of what you call bagholders (People who bought into the stock at the height of the run) Now, if you bought at the low end and sold at the high end than you made out. You pretty much should take your profits and move on to the next penny stock.
Penny Stocks Do's & Don'ts
1) Understanding and interpreting Level 2 quotes is critical to improving your penny stock trading performance.
2) Look for companies that have consistently generated cash and are growing their free cash flow over time
With proper research and education, penny stock trading can be a profitable and fun hobby.
3) When trading penny stocks you have to be able to keep a very close eye on them.
4) Why some stocks go and some don't, mergers fall through on most and other have financing yanked from them, all in all we do find some to get into early.
5) As always, we encourage you to do your own research and dont believe a dam thing someone says about anything in here. Also, remember when you are in a position to profit it is often wise to do so.
6) Do not buy a stock based on the number of shares you can buy!
7) Don't ride a penny stocks into the dirt! If you are down 10% to 20% on a penny stock position, it's time to cut your losses and get out. If you are well diversified, you will have other promising stocks to help you recover your losses.
8) Never fall in love with a stock! Stick to your plan! If a one of your penny stock picks hits your target support price, have a exit strategy before your buy order fill .when the stock continues to climb take profits on the way up, don't chase it down on panic selling .
9) Failing to cut losses - Cut your losses. Protect the bulk of your investment. Cutting your losses means you live to trade again.
10) Averaging down - This means throwing good money after bad money.
11) Buying on tip or on rumor - Always do your due diligence, even if the news is reported by the company themselves.
12) Folks learn trader pivots point on different time frames they will usually stop at the next one above on either the 60 min , daily or weekly charts... ma lines , bollinger bands or fibonacci lines
You can make alot of money by just investing a little but you need to know the stocks to pick, the ones that are poised to run and most of all, know when to sell. Don't fall in love with a stock and DON'T GET GREEDY. Keep reinvesting and make alot more over the long run.
As Kenny Rogers sang in his gambler song (Know when to hold them and know when to fold them) because basically, Penny stocks are a gamble
O'h and it's VERY important to learn the RULES OF THE GAME before playing...
JMHO
Happy trading & BOL to all
Penny stocks can also be extremely risky if you don't know what you are doing. Golden rule: Never fall in love with a penny stock.
Penny stocks are risky and require research. Alot of the companies trading penny stocks have limited information and history. Often they are just shell companies. A shell company is an actual company but does not have assets or actually do business.
People are attracted to penny stocks if there is so much risk involved. The reason is simple- there is alot of money to be made if traded correctly. Penny stocks can run up real quick- Often this is done by pump and dump schemes. This basically means a bunch of people get together to promote a stock with false expectations of what company is planning to do etc. They feed investors a bunch of fluff basically. They run the price up, sell the stock than dump the stock. This leaves alot of what you call bagholders (People who bought into the stock at the height of the run) Now, if you bought at the low end and sold at the high end than you made out. You pretty much should take your profits and move on to the next penny stock.
Penny Stocks Do's & Don'ts
1) Understanding and interpreting Level 2 quotes is critical to improving your penny stock trading performance.
2) Look for companies that have consistently generated cash and are growing their free cash flow over time
With proper research and education, penny stock trading can be a profitable and fun hobby.
3) When trading penny stocks you have to be able to keep a very close eye on them.
4) Why some stocks go and some don't, mergers fall through on most and other have financing yanked from them, all in all we do find some to get into early.
5) As always, we encourage you to do your own research and dont believe a dam thing someone says about anything in here. Also, remember when you are in a position to profit it is often wise to do so.
6) Do not buy a stock based on the number of shares you can buy!
7) Don't ride a penny stocks into the dirt! If you are down 10% to 20% on a penny stock position, it's time to cut your losses and get out. If you are well diversified, you will have other promising stocks to help you recover your losses.
8) Never fall in love with a stock! Stick to your plan! If a one of your penny stock picks hits your target support price, have a exit strategy before your buy order fill .when the stock continues to climb take profits on the way up, don't chase it down on panic selling .
9) Failing to cut losses - Cut your losses. Protect the bulk of your investment. Cutting your losses means you live to trade again.
10) Averaging down - This means throwing good money after bad money.
11) Buying on tip or on rumor - Always do your due diligence, even if the news is reported by the company themselves.
12) Folks learn trader pivots point on different time frames they will usually stop at the next one above on either the 60 min , daily or weekly charts... ma lines , bollinger bands or fibonacci lines
You can make alot of money by just investing a little but you need to know the stocks to pick, the ones that are poised to run and most of all, know when to sell. Don't fall in love with a stock and DON'T GET GREEDY. Keep reinvesting and make alot more over the long run.
As Kenny Rogers sang in his gambler song (Know when to hold them and know when to fold them) because basically, Penny stocks are a gamble
O'h and it's VERY important to learn the RULES OF THE GAME before playing...
JMHO
Happy trading & BOL to all
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