Tips on Finding The Best Penny Stocks
Tips on Finding The Best Penny Stocks
It seems logical that before you put your money into any investment, you would like to be aware if the stocks you are buying have a realistic possibility of increasing in value. There are thousands of penny stocks that exist on the market. It is imperative that before you purchase any of these stocks, you know how to identify the top stocks from over hyped ones. Before I begin, I’d like to say that prior to looking for some penny stocks you’d like to buy, you need a broker. My broker of choice is Questrade, as I have been a client of theirs for some time now. Check out the review I linked to for more details!
So how do you find the best penny stocks?
This is not an easy task, as being able to do so requires a great deal of research and a few actual trading experiences. Finding the top penny stocks requires strict technical analysis and research. Here are some of the strategies traders use.
One good method of checking whether a penny stocks company is worth investing into is to check its trading charts. Observe them for detectable trading patterns. Once you notice that a stock has a habitual record of increasing in price shortly before the release of a quarterly report, then it would be good to time your purchase with the next projected price increase and sell it before the subsequent earnings report is issued.
Being able to read and understand a stock’s chart is the simplest way to verify if the stock should belong in your portfolio. Find companies with trustworthy and knowledgeable management.
Beware of penny stock scams
Unfortunately, the market is filled with deceitful companies that are being managed by dishonest stock promoters whose only aim is to publish and hype their stocks and gain a big profit. Most of the time, they can effortlessly manipulate their stock price. However, because there is no actual company that would be accountable to the claims, the amplification of the price rarely lasts more than a single trading session. Good stocks can be found in industries that are currently experiencing a significant demand for their products or services.
A company that offers service with original features that are not offered by any of its competitors has a high possibility of being discovered. Once known, it is expected their stock price will dramatically increase.
Just like all blue chip stocks, the good penny stocks do not rely on hype. These companies rely on their continued performance and solid products. If you own a penny stock that abruptly starts going up because of a press release, play it safe, take your profits and pull out. Credible price increases will happen when a company has really good products or services, or fulfill a need, and not because of some press release.
Timing the penny stock market
Timing the market can be of the utmost importance. Stocks are constantly moving, and investors need to identify when the stock may move up or down and analyze the stock chart of each stock being analyzed. Investors should stay up to date by reading a variety of books on the stock market and reading business news as well as global news.
Even if you have formulated a system for finding the top penny stocks, it won’t be fool-proof. Although it might increase your chances of trading successfully, always put into mind that the penny stock market will always be a gamble that has risks. If you are interested in learning if penny stocks are dangerous, and how to avoid disasters, check out my page on the dangers of penny stocks( Please link “the dangers of penny stocks” to my previous article you published called Are Penny Stocks Dangerous? Information On Pink Sheet Stocks)
As a little bonus, here is a great video by Timothy Sykes on finding the best penny stocks! Enjoy!