Are you the type who wakes up in the morning and jumps on any penny stocks’ wagon?
Penny stocks are being traded all over, still many people are having a hard time distinguish among the good and bad stocks. If your answer to this question is yes, then it’s the reason why you’ve been losing so much money trading penny stocks. Don’t think that you are just another unlucky trader because you are clearly the one doing this to yourself.
First of all, investing is made with money that you know you won’t be in need of for sometime. If you are planning in investing into penny stocks this money better not be your next rent payment. Now that I have this out of the way, let’s proceed to our topic.
Penny stocks won’t be profitable to you if the companies in which you invest are not making money. The number one approach to pick a winning stock is to look to its quarterly earnings and sales numbers. These two can tell you a lot about a company, which should help you judge whether to buy or not to buy.
Do you buy penny stocks according to all they hypes?
I don’t know if you have heard of Timothy Sykes who turned $12,000 to $4.5 million trading penny stocks. People make it looks so simple when referring to that, but in reality it is not. Lots of work were invested from his part in order to achieve such great goal.
Picking some wining penny stocks is not all about the hypes, not that they don’t play any role in it but it’s at a minimum.
To be honest, those who promise you that your money will triple by buying this or that stock are just pure promoters. No one can really know 100 percent as of whether or not a penny stock will increase in value in this particular day or time. The truth is they are pure predictions, they may or may not occur as predicted.
You may want to look at…
The length that a company has been around can give you a good idea about the company’s stock activities.
If the company has a website check it out. It won’t hurt, but help you. Many of the scam penny stocks usually don’t have a website because they know they will disappear soon or later.
In some cases, a company that is growing and new in business would be your best bet. Most penny stocks are trading so low because of their financial crisis. New companies usually don’t have this problem, thus making them more attractive than their competitors.
You would want look into the industry of the company. What are their competitors? Can this company compete with the proven ones in this business? Is this industry on the rise or is there anything that should make this industry a powerful one in the future?
These should be some head ups for you in choosing the right penny stocks. As you can see already it is not that hard once you know what you have to do.
I know you are not looking to invest long term in these penny stocks, but knowing these minimum information can make your trading experience a lot safer and profitable.
Don’t put all your eggs in one basket
You have heard of this over and over again. But it is in your best interest not to put all of your hard earned money into one penny stock. Having a portfolio made up of a variety of penny stocks is the way to go, because if things go against you chances are you won’t lose all of your money.
A smart trader never trades according to all the hypes, but his knowledge about the company. Do your research, gather information about the potential stocks, dig deeper to find anything that may be of help to you in your decision making. If you follow these advises your chance of wining with your next pick should improve.