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How to Find the Best Penny Stocks

The secret on how to find the best penny stocks is to start by analyzing your needs before doing a purchase. In the industry, you take chances by buying cheap and selling at a profit. There is potential of making huge profits. Penny stocks are generally valued under a dollar and the trade is highly speculative.
To find the best penny stocks is one of the easiest ways to make money trading. It is however risky to put all your money into the trade. Trade or invest with money that you will never regret losing. Doing a thorough background check before investing on penny stocks market guides you in making the right decision.
Getting the best penny Stock Deals
Penny stocks are associated with small public companies that trade in low share prices. Since these are not listed in the national stock exchange, they attract low market capitalization. Due to their volatility, they are easily manipulated though pump and dump schemes or stock promotions.
Penny stocks are traded over the counter, through the bulletin board or pink sheets. To get the best value, you need to ensure the company is registered under Financial Regulatory Authority (FINRA). This way you are assured of trading in the best penny stocks.
Do a Simple Background Research
Just like trading the Stock Market, there are many penny stocks companies and you need to research first. Most of these companies are small and are likely to go under. To get the best penny stock deals, you need to understand the company business model. Find out who their competitors are, what profits they make and what products they offer.
Buying penny stocks from a stable public company is a surefire of making profits with time. Small mining or oil exploration companies have the potential to enable you find the best penny stocks. When the prices of their materials appreciate, you make profits. Their performance is based on how they react to external commodity prices.
Mistakes to Avoid when Investing in Penny Stocks
• Avoid trading company that gives incomplete or indirect financial reporting to the public.
• Avoid companies with limited liquidity.
• Traders that develop periodic strategies of creating artificial demands to off-load shares.
• Penny stocks that are sold through short selling strategy.
• Penny stock dealers that invest purely on the Pink Sheets concept.
In the penny stock market, the governing reporting guidelines are loose. Stocks are delisted and listed at the traders will. A good trader should have a self-regulating reputation. They should have set reporting and accounting standards to benefit the investor and retain profits.
Penny stocks are not standardized and can easily be manipulated and scammed. Interested parties can easily run the price up and delist immediately once they make gains. This pump and dump scam is common especially for newbie investors. Before trading, monitor existing trends and make the right decision. Only use money that you are comfortable with in case you suspect scams.
There are many legitimate and genuine companies and you need to take time and identify them. You will be able to find a wining company for penny stock investing. Any promising company will land you in massive gains with time. Losing a few picks is the best way to learn how to find the best penny stocks and unveil the industry tricks. Once you know what you are looking for, making profits is possible.