The phrase penny stock draws the attention of many. Can hot penny stocks meet their money-making hype that is everywhere? The USA securities and exchange commission defines penny stocks as low-priced, speculative securities of small companies. It makes the definition to be more ambiguous as many versions get created. How will these short shares be more appealing and lucrative? Newbie investors get lured into prospects of quick gains and not avenues that they invest their capital and take time to reap. Many investors came from different notions. Some are short term while others long period into the penny stock business. As a newbie, you should be cautious with your trading to ensure you reap well or else you will accrue losses.
Use the following tips to make your venture profitable.
Penny stock trading tips
Fundamental use screeners
Many investors roam from one stock to the next with vague ideas about which company is suitable for them to pick. They rotate on message boards and forums to do this. Avoid being in this category. Find the best penny stock picks by using automated screening devices.
Using stock screeners helps you filter stocks according to their intrinsic value, dividends, cash flows and growth.
Make use of simple techniques for analysis.
Technical analysis makes people cringe. If you are in this category of people, use simple analysis techniques to help you out in your trading, like support and resistance levels on charts. Look at the six months daily data, make above and underneath horizontal lines prices that the penny stock bounced on and off. Buy on support and sell before resistance crops in the penny stock market.
Consider the liquidity
Some stocks trade in a few hundred shares while others in hundreds of thousands. Multiply the share amounts of a company and the price to see the amount of money that daily passes through the company. Stocks with a hundred or a few thousand dollars traded in a day are challenging to invest. They must drive their prices up. During selling time, prices will palmate as there are few buyers to buy.
Invest in a stock that has enough liquidity. Use limit orders to set overhead maximum share price. Also, limit orders on illiquid stocks to have enough time to fill up.
Don’t consider penny stocks with high jump volume.
Worst performing stocks jump in prices on a very high volume. There is a secret to this kind of store. Consider buying stocks that went high in merit on high volume previously but now trading low. You can also buy stocks with low levels of price trading on decreasing volumes. Thewy indicates selling is ending.
Conclusion
Employ many strategies and ways in trading with a share of low price. The most important thing is to carry your intense research on each penny stock. You will find the best penny stock to invest in them.
