How to choose the best penny stocks? |
Posted: January 28, 2014 |
The stock market is a highly lucrative place that traders choose to make quick money from. But, penny stocks have always earned a bad name for themselves. Even though they are considered the fastest way to make quick money, one has to be clever enough to play it well. Experienced traders, who have been in this field for quite some years of now, also tend to make great losses often. So, people should first understand the dynamics of this field before stepping into it. Which penny stocks are considered the best? It is exciting and is always considered the best bet if speculation is done on stocks trading that costs less than $1per share. But, often it found to tantamount to gambling at the craps table. One can be very sure in the case of best penny stocks and microcap space. This area is always full of scams, pump-and-dumps, and outright frauds. Thus, investors who would not be able to pull the reins of their greed would fall prey to swindlers who are waiting for such chances. They make outrageous and fake claims about small companies and try to attract investors by claiming that a large windfall is possible only with a small investment. One should remember that it is not lottery. So, such cases rarely happen and in fact, the reverse happens at most times. The financial footing is shaky in case of most microcap companies. So, it is not the best place to put your money on. Companies to be careful of The best penny stocks are often legitimate businesses. But, if dug out deeply it would be seen that most of the times, they are undercapitalized. They emerge to be unsuccessful businesses and not industry leaders. Thus, the most common penny stocks that are popular among investors are of the formerly successful companies that are currently going through a rough patch. In most cases, the market feels that such companies will head to bankruptcy very soon, as the stocks are set in accordance with that. But, sometimes the stocks rebound and the company ends up performing staggeringly well. There were certain furniture and software companies that performed amazingly well, even when their past records were shattering. At a certain phase of their career, their stocks were going through a highly volatile stage. But, at the most unexpected moment, the company hit a bulls-eye with its shares. The best way to invest In order to take baby steps in this field, if one does not have sufficient experience, it is very important to go slow. Investing a nominal amount in the beginning would be the right thing to do. Do never go for a large amount, as the risks will grow along with it. It is always right to test before, taking a bigger leap. So, smart investors would invest small amounts and buy greater numbers of shares, rather than investing a larger amount in buying a single share. Low-priced shares offer a better scope of earning money quickly. Also, if a few shares sink, one would have a few more in his hands. Thus, he won’t lose all the money in a single go. There would be some shares from where he would earn a good amount. A smart tip given by experts says that one should never invest more than 3-5% of the corpus in penny stocks. It is also important to have a few people around, who would present reliable information to you. This is a real problem. Often, people do not get the right information of fall or rise in prices. Thus, selling the shares off at the right time becomes a huge problem. There are also lies and scams, which hinder people from making profits. Thus, always remaining informed is very important. One should either search online or have a person to give the right information about penny stocks at the correct times.
|
|||||||||||||||||||||||||||||||||||||||||||
|