Penny Stock Investing and Trading

If you ask anyone in the financial world, what they think about investing or trading penny stocks, the answer that you will probably get will be: "Do not do it. You will lose your money, because 90% of the penny joint stock companies are scams. Penny companies simply want to sell the shares and is not interested in developing their businesses. "The truth is that investing or trading penny stocks is a very risky business. So here is the most important tip about penny stocks: Invest only money you can afford to lose.

If penny stocks are so risky as to why people invest in or trade them?

The answer is because you can do a lot of money in a short time, if you know what you do.

If you are still reading and have decided that you want to trade penny stocks, you need the right tools and tips to help you survive and even win some money.

Step # 1 - Find the right Penny Stock to Buy

To find the right equipment, you need to do some research or due diligence. There are a lot of websites that will help you with your DD and you can find a list of useful them www.stocks-reporter.com.

The following points will guide you in learning important information about a company where you are interested in investing:

1. Shareholder structure: AS (Shares Authorized) and OS (Outstanding Stock and Float)

2. Transfer agent transparency

3. SEC filing

4. Financial results

5. Competitive position in its industry

6. Business Model

7. Earning power

8. Valuation or the potential value of the company.

For example, when looking into the ownership of what you want to see is that there is no dilution. One good sign is when a company has maximized OS and is close to the AS. Watching Level 2 will also give you a good indication if there is no dilution from the company. A good strategy is to follow insiders who know the business better than anyone else.

Step # 2 - determine when to buy

After finding the penny stock that you plan to buy, you'll find your entry and how to do it the right way. After trading in that stock for a few days with chart analysis will give you a lot of valuable information. At this point, it is strongly recommended for everyone to learn some basic chart reading or at least let others analyze the chart for you. You can ask for help on many popular message boards that discuss stock trading and chart analysis. An important tip on how to conduct trade in a penny stock is: Be very patient and always try to buy at the offer price.

Step # 3 - to sell or an exit strategy

The exit strategy is something very personal to different companies or investors.

It is very important to implement your strategy immediately after executing the purchase order. In most cases, a good idea to put a sell around 50% of your position at around 20% -30% PPS spike. Additional 10% -20% increase in PPS and then sell another 50% of your current position and let the rest ride for a while. Generally, you should exit strategy be very flexible and change with the news, dynamics and volume. 90% of the time, however, you must sell at ASK, so it will not affect the ride.

TIP: Remember to take profits.

Happy Trading