Buying Penny Stocks

After innovative changes in legislation, the evolution of the World Wide Web and advances in stock trading technology, buying penny stocks online is now far more accessible for casual day traders. You no longer need to wear a starched dress shirt or fight your way through an expensive college. You can begin profiting from buying and selling these micro cap stocks right away from the comfort of your own home, especially with the help of day trading software.

This phenomenon gives the financial power back to the individual. A single individual at home on his personal computer can now leverage day trading software to research and determine the best penny stocks online for him or her self. While penny stock fortunes are possible, you should proceed with caution and always do your due diligence.

I orient this site towards beginner and intermediate online penny stock traders. But many of the techniques and resources I provide might have you trading with savvy veterans in little time. Start with resources like how to read stock charts then move on from there.

Buying Penny Stocks is Risky

Note that penny stock trading can be a risky business. When you start, I encourage you to begin by thinking in terms of limiting your risk rather than turning a quick profit. Your profit will develop with practice and patience. But buying penny stocks requires discipline, consistency and above all else an emotional control. Do not act on a whim; rather, act with purpose while enacting an overall strategy.

Despite the label penny stock and the low barrier to entry, people specifically trade penny stocks online for the potential high returns. A penny stock is a stock that trades under $5.00 per share and has a market cap under $500M.

Savvy traders often trade on multiple returns with penny shares trading under $0.20 to fish for the best potential. For example, if you purchase at $0.15 (you’ll see this called the “entry point”) and sell at $0.60 (the “target”), you create the potential of making 4 times your return.

Think about it: obvious this sort of profit is far more likely with stocks in this low and volatile range.

The key to successful penny stock investing is to get in then get out ahead of the crowd given the general lack of liquidity of penny stocks.



Successful Stock Trading Requires Research and Work

Trading penny stocks to make money requires buying penny stocks online with promising outlooks. This means identifying companies that feature growing profits and sales, an assertive executive team, and a defined & explicit plan for expansion. Share growth is usually attributed to strong business fundamentals.

So how do you keep up with all this information? Well, despite what some people who selling hope online might lead you to believe you need to do your research and you need to spend a little money up front to properly prepare yourself.

You need to perform three basic steps if you want to succeed in this market. If you REALLY want to succeed in finding the best penny stocks I’ll add a bonus step.

  1. You need to purchase and study some kind of reputable and authoritative book on day trading, preferably one that emphasizes penny stocks. Do NOT dive into this market without studying beforehand and without a quality guide at your hand. You may even want to consider enrolling in a day trading school to gain a solid base of knowledge
  2. You need to join a penny stock newsletter. This requires paying some kind of subscription in most cases. Anyone who claims you can trade in this market without a quality newsletter is lying through their teeth. As I stated earlier, you need to get in and out before the crowd in order to succeed in this market. You also need to do a lot of research on companies before investing. A quality newsletter provides you with these advantages. In almost all cases, the best penny stock picks are saturated by members of professional newsletters before they hit the public radar.
  3. You need to perform your own due diligence. No matter how high quality or accurate the penny stock newsletter, you need to study stock trading on your own and you need to research and evaluate picks suggested by the newsletter. Quality newsletters provide a great foundation and greatly increase your likelihood of success, but nobody — I mean nobody — will pick winners 100 percent of the time. You need to increase your odds by doing your own research on top of the picks offered you by any given newsletter.

So what’s the bonus step? Am I about to sell you something? No.

But I do suggest you research some day trading software. This will automate many of the small steps you need to take when evaluating a penny stock online. You can at least quickly verify some specific data on the stock recommendation provided by your newsletter. Strong stock market software can also help you do some of your own fast, deep evaluation.

Which Penny Stock Newsletter Is Best?

At this point you may be wondering… so what penny stock newsletter should I choose to give me the best information on this market? What book should I buy to start studying before I dive into this market? What day trading software should I purchase and install to help me out?

Just as you need to research the specific stocks and companies, you also need to research the tools you want use to help you succeed in this market. There is no single best book, newsletter or software for buying penny stocks; it all depends on your approach, your goals and your personality.