Given the low liquidity and high-risk of investing in a penny stock, the question arises whether it is even possible finding some winners in this industry. The answer is yes, given that you follow these guidelines:
Focusing On Earnings
Look for a penny stock that has robust earnings growth and who is trading close to its 52-week high.
Don’t Rely On Penny Stock Newsletters
Penny stock investors often look at newsletters for recommendations, yet they are unreliable and typically own shares in the same penny stock they are touting. Always look at the disclose notice included in a newsletter, which is a compulsory inclusion by the SEC.
Targeting A Penny Stock With Heftier Trading Volume
The higher a penny stock trades, the more dependent it is. This is why you need to focus on penny stocks that provide a higher trading volume (over 100 000 shares in a single trading session).
Sticking To The Rule Of Over .50 Cents Per Share
Another great rule of thumb is to trade in a penny stock that has a price of over fifty cents per share. Those that trade for fewer than fifty cents are usually highly speculative and have companies without discernible success or record of accomplishment.
Only Purchasing Penny Stocks Of Those Who Earn Money
It may seem prevalent, but when it comes to a penny stock, you must do your research. Subsequently, look at the company’s financials before purchasing a penny stock. If there is renowned proof of a company’s profit, the odds are lesser of losing money when buying a penny stock.
Avoid Buying A Penny Stock, Which Is Talked Up
There are many broken dreams scattered on the penny stock market with drained bank accounts of investors that purchased stock contingent on an expert’s promise of the stock price eventually skyrocketing. I know penny stock for having shareholders who present themselves as impartial investing experts that talk up the stock to artificially boost its price. Avoid falling for this scam. Look at the company’s financial statements is their record of paying bills and making money. These are the leading indicator that a penny stock can offer economic opportunity for its investors.
Remain Patient
Once you’ve identified a penny stock that provides potential gains, don’t purchase it straight away. Instead, track the stock for about a week and observe how it trades, particularly looking at the frequency of trades, unstable share price fluctuations, and knowing the most favorable entry price before making a purchase.
Remain Practical
The odds of losing twenty-five percent with penny stock or more of investment are higher than earning the same rate in return. Subsequently, if a penny stock investment is ticking upward significantly, count yourself lucky and sell with the upside since its most likely your best opportunity in making a profit on a penny stock.
Conclusion
In conclusion, knowing the odds of finding a reliable, good penny stock that remunerates you with profitable rewards are against you. With this being said, locating a diamond in the rough is not insufferable if you follow these guidelines frequently.
