Reduce Your Risk When Trading Penny Stocks

It’s common knowledge that penny stocks carry a higher than average risk when it comes to investments. But this doesn’t mean that they shouldn’t be a part of your investment portfolio. Micro cap stocks have the potential for large gains if you know how to work past the scams and the bankruptcies. If you want to know how to reduce your risk when investing in penny stocks here are a few tactics you may want to use so you can lower your overall risk and create a diversified growth area for your stock portfolio.
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Creating The Best Penny Stock Trading Strategy

Deciding that you’re ready to add penny stocks to your investment or trading strategy is not enough. If you want to have any success in this market you need to create a good trading strategy. To do this you need to be honest with yourself about your personality, time and your goals with this type of investment. Here are a few things you should consider as you work on creating the best trading strategy for your lifestyle, budget and goals. Continue reading

Can You Make Money Shorting Penny Stocks?

Penny stocks are known to be risky investments. The old adage that the stock market generally grows doesn’t apply in the penny stock universe. Shorting stocks is betting a stock will fall instead of rise in price. What essentially happens is you sell a stock you don’t own for money, but you owe the stock back in the future. You simply wait for the stock price to fall and then you buy the stock and keep the difference. While you don’t want to short stocks that sit stagnant or slowly rise over time you can improve your odds with a few simple tactics. Continue reading

Red Flags to Watch For When Evaluating Penny Stocks

Penny stocks are risky, but that doesn’t mean you shouldn’t have any in your investment accounts. There are certain stock screens you can use to help weed out bad penny stocks. These tips should be used as part of your initial screening process along with other technical and fundamental screens to pick your list of acceptable penny stocks. Keep in mind these screens won’t be as useful once you have already invested in a stock, but they may save you some heartache upfront. Continue reading

How Penny Stocks Are Different from Other Stocks

Stocks are simply a piece of the pie — a small piece of a corporation. They can be purchased individually from a person who owns the stock or they can be purchased from a market or exchange. In this sense all stocks are the same. Where the term penny stocks comes in and how they are different from what most people think of as stock is the level of safety.

With only so many resources available the Security Exchanges Commission (SEC) can only audit a certain portion of companies every year. While the companies wishing to be on a major exchange pay for their own independent audits as part of being on the exchange, smaller companies do not. Continue reading

The Life Of The Penny Stock Pump And Dump

The penny stock pump and dump scheme is the longest running pink sheet scheme still in practice today, but it is difficult to control because of the way it works. Since the barrier to day trading has been reduced by advances in computers and internet availability more people are becoming addicted to trading stocks and making money in this market. The newcomers to day trading are often more susceptible to manipulation because they are often following technical trading patterns laid out in books, but even more experienced traders can get caught up in these schemes.

Here’s how the penny stock scheme works: Continue reading

Why Day Trading Penny Stocks May Be Your Best Option

Day trading involves sticking with stocks for the shortest period of time possible to make as many small profits as possible. Day trading often carries a stigma of wild gamblers or genius big shots playing or manipulating a system to make millions, but this usually isn’t the reality of this profession.

In reality the day trader is someone who knows how to make a consistent plan that has proved itself and stick with it. Most day traders prefer highly volatile systems like the options and futures markets, but there is plenty of room in the realm of day trading penny stocks. Here are some reasons you should or shouldn’t day trade penny stocks. Continue reading