Many new investors are drawn to penny stocks because of the possibility of gaining fantastic returns. While it is possible to make significant returns, you should know how to play the game. Unfortunately, most small investors make the mistake of applying the same rules and principles as they would for large cap stocks. This will not work with penny stocks!
If you want to increase your chances of getting a sizeable return, learn the following rules:
1. Avoid Investing Large Amounts All in One Go:
By their very nature, penny stocks can go up one moment and down in the next. As a new investor, start by investing a small portion of your money. Ideally, penny stock investments should not take up more than ten percent of your total portfolio. Only invest what you can afford to risk.
2. Invest in 2 to 3 Stocks:
The rule of diversification that you use for your regular stocks does not apply or work here. Invest only in a handful of PENNY STOCKS. Spreading your savings across a basket of low-priced stocks will NOT give you a meaningful return. Considering how volatile penny stocks are, it is far easier to monitor two to three stocks versus ten.
3. Avoid Investing and Forgetting:
A penny stock investment provides benefits in the short term. You cannot leave them unattended, expecting them to grow as you would with regular stocks. If your penny stock experiences a sudden sharp rise, it is time to exit and take the profit. Don’t make the mistake of waiting till the price goes higher, because that usually doesn’t happen with penny stocks. Set a target level and once it is met, exit.
4. Be Sceptical:
Don’t believe in newsletters, email campaigns, telemarketing calls or SMSs. These are likely being paid for by companies who want you to invest in a failing stock. Many of these will make false claims about the management’s success record, or false company mergers, etc. More likely than not, all these are a part of pump and dump schemes.
Evaluate the source for its veracity. With the Internet, you can easily pull up information about a particular company and its management team.
5. Purchase stocks with large Volumes:
Many penny stocks are thinly traded. In other words, they do not have many shares. In such cases it will become very difficult for you to offload your shares when you plan to exit. When you purchase stocks with high volumes, there is sufficient liquidity. Look at the monthly average as opposed to a day’s trading.
6. Avoid Averaging your Purchases:
If you purchased a share for $4 and it is now trading for $1, do NOT average out the purchase by acquiring more shares. You will end up creating a bigger hole. The best strategy to improve your average is to sell the shares when the price increases, instead of purchasing more when it drops.
7. Stay Focused:
In the penny stocks arena, “it’s different this time” is a dangerous way of thinking. Investors who make quick gains develop overconfidence and start making rash decisions. Carefully consider the rules of investing in penny stock mentioned above. Apply logic when you invest. Thoroughly investigate the company and its management team. Only when you feel truly confident in a particular company and its shares, that’s when you should invest. Do not let overconfident thinking rule your judgment.
To get the most out of your penny stock investment, you need to master a new set of rules; ones that are different from regular stock investments. To invest successfully in penny stocks, use a reliable resource as your guide and stick to the rules of investing, listed above.
HOW TO SELECT A PENNY STOCK NEWSLETTER
Penny stocks newsletters are your compass in the uncharted world of penny stock trading. These newsletters are invaluable repositories of information, designed to provide details about various small-cap companies. There are many penny stocks newsletters out there, so choosing one guide out of the lot will seem like a task.
The following guide will teach you how to filter out the best penny stock newsletters:
Penny Stock Newsletters that provide opportunities to learning and training resources about investing are worthwhile. Investing is a mixture of science, art and luck. While the fundamentals are the same, there’s always something new and exciting to learn. The ideal newsletter will cater to all types of investors. When selecting a newsletter subscription, keep your knowledge and experience level with penny stocks in mind.
Some newsletters offer support in the form of bulletin boards and forums. Members can access these at any time to share ideas, learn strategies from other investors and ask for general advice or help. This type of interaction will help you develop your knowledge. As you gain in experience, you will have a chance to teach as well.
This is perhaps the most crucial reason to pick a particular penny stock newsletter subscription. You obviously want favorable microcap stock choices. Pay heed to the newsletter’s win to loss ratio. Some newsletters enable you to preview their previous newsletter or receive email alerts. Subscribe to a few of these alerts and paper trade these penny stocks. You will quickly learn whether a newsletter is reliable or not.
Free Trial Period or Money Back Guarantee:
No penny stock newsletter can guarantee 100% returns all the time. If they do, don’t waste time. Newsletters that offer some money-back guarantee are your best bet. A free trial is also worthwhile. Carefully peruse over the fine print and do not sign up for payment plans unless you are absolutely sure.
Check for Disclosures:
Some newsletters receive compensation from companies and entities for recommending certain products or services to readers. If you read a recommendation for particular penny stocks in a newsletter, it is because they were paid to do so. This is usually disclosed in the fine print. Stay away from recommendations unless your own research corroborates it!
By using the strategies mentioned above, you will be able to select the best penny stock newsletters to guide you towards profitable trading.
NEWSLETTERS HELP IN REAPING A FORTUNE THROUGH PENNY STOCKS
Do you know which sector is the most interesting and lucrative in the stock market? Yes, you guessed it right. It is none other than Penny Stocks. They get doubled or tripled in a very short time.
Well, experts say that they are ordained to fall if you think from a long-term perspective but who wants to remain invested for so long?
It is a stock that you should put money into, wait for a sufficient return and book the profit. It is the game of perfect timing where only those win who are alert and swift.
Does it mean you don’t have even a feeble chance to reap profits by investing in Penny Stocks? Don’t get disheartened. You can also do it by subscribing to our Penny Stock Newsletter
Subscribe a newsletter, keep a close watch and hit the jackpot
You heard it right. It is the simplest Success Mantra. There are several newsletters out there. Compare the top five, limit your choice to three and chose what lures you the most. The process is simple and effective, but it is easier said than done.
In reality, filtering out newsletters would be a daunting task. Don’t worry; we are there to help into it as well.
Does the newsletter talk about penny stock investment in general?
No doubt, the primary task of the newsletter is to give you hints about stocks that are going to flourish. However, it should offer access to learning resources as well. You should get investing fundamentals.
Does it offer support?
You are not an investor that needs support and spoon-feeding; it is fantastic! However, there is nothing wrong if you get some bulletin board or forum where you can ask questions or share your views. If the newsletter provides it, then you must go for it.
Do you get sufficient picks?
Of course, you should choose a newsletter that gives you the maximum picks. At the end of the day, it is the prime factor of attraction. Moreover, the newsletter should boast about the maximum percentage of success.
You can’t get 100% success; it goes without saying!
If there is a free trial or money back guarantee, then there is nothing like it!
Good quality newsletters offer some kind of guarantee. You should prefer it. Make sure there are no hidden terms and conditions.
Subscribe good quality newsletters and add more dimensions to your earnings through the stock market.
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