Category: Penny Stocks (page 1 of 2)

December 12, 2021 / 0 Comments

TOP 5 Reasons To Invest In Penny Stocks

Penny stocks have been around since the beginning of the securities markets. They offer the best opportunity for the little guy to trade stocks and see massive gains in a market that isn’t controlled or manipulated by big hedge funds, large cap executive insider trading and mass media overhyping of stock. Today’s large cap stocks are seeing, in my opinion, dangerous speculative levels of 30x P/E ratios because of overhyping. Go back and look at those ratio’s before September 2008.

That is not to say that penny stocks are without risk. All investments contain an element of risk. With the proper education that risk can be minimized compared to the crazy return penny stocks are known to payout.

It is much harder, as you know to bring a stock’s price from $100 to $200 giving it a 100% gain that it is bringing a stock price from $0.10 to $0.20 giving the same 100% gain! Even the lunch lady can figure that much out.

At Pennystockfundamental.com we feel that the top 5 reasons to invest in penny stocks are:

Warren Buffet didn’t make billions investing in overpriced stock. His investing strategy has long been hailed as having the soundest investing concept. Not to be confused with trading, the buy low and hold approach is by far the most lucrative investing strategy. In today’s roaring stock market it is very difficult to find underpriced over even fair priced stock! The OTC Markets offer an ocean of companies who will become the next IBM(IBM), Google(GOOG), APPLE(APPL) Tesla (TSLA).
A balanced portfolio should always contain a swing stock. Any financial advisor will tell you the old adage don’t put all your eggs in the same basket. In our ever evolving economy you have a plethora of options to diversify your investment portfolio. Penny stocks offer you the potential to make double digit return’s year over year with minimal risk within a balanced portfolio of large cap stocks and treasury bonds
Monster Energy is just one example of a well-known stock with a globally recognized brand that has become a huge momentum stock. From its low of $.069 on Dec. 29, 1995, $1000 in Monster Energy would now be worth $101 000. Which means a gutsy investment of $10 000 would of made you a millionaire without lifting a finger! Of course this was couple with a the explosion of the energy drink sector and the OTC markets and penny stocks trade in all the future sectors such as 3D printing, Cannabis, Robotics, Environmental and Energy.
Triple Digit Gains are witnessed every day by stock traders in the OTC Markets. Throughout every sector that is exploding there a pure momentum plays to be made on a daily basis. It is not unheard of to see 15-20 stocks surge on double, triple even tenfold gains. This makes it easy to grow your investment portfolio and become a full time trader from the comfort of your home or office with little effort. Just open a trading account and get going!
Fast Profits! It’s what we all really want isn’t it? I mean we all want to pay off our mortgage faster, buy that new car we are dreaming of, maybe a new BBQ and a pool to go with it? The only way to make fast money trading is with penny stocks. No other market, no one on Wall Street can make you the kind of triple digit returns penny stocks on the OTCMarkets can make you. So go out there and trade some penny stocks and buy that new toy, pay off those student loans and get your life started!

Be sure you follow the proper informative sources, because as I mentioned before there are many, many wild gains to be made buying penny stocks in the OTC Markets and you need to make sure you stay ahead of the curve. The sooner you know, the quicker you buy the more you will gain.

Trade hard, play hard,

November 6, 2021 / 0 Comments

The 8 Most Important Penny Stock Tips to Remember

Looking to get into the penny stock market and want the best penny stock tips for success? You’re in the right place. Investing in penny stocks can be very lucrative if you know what you’re doing. You can skip right to our best resource for penny stock investing here.

Penny stocks operate a little differently than common stocks. People mistakenly think that due to their low entry price, penny stocks are the easiest stocks to invest in. While it’s true you can play this market with a small amount of cash, these stocks are pretty risky if you don’t know what you’re doing. That’s why you need guidelines and you need to stick to them. Read through these important penny stock tips to know what to do.

Got a hot tip? Know where it came from.

Penny stocks are regulated by the SEC, but due to the nature of trading these stocks, the market is ripe for penny stock scams. Be on the lookout for people who’s only interest is to take your money and run. Sometimes, but not always, free information is the most suspicious. This can be in the form of a free newsletter, chat room or forum. The information is designed to grab your attention and get you to take action. Good scammers are great marketers.

So before making any purchases, make sure the source of your tip is solid and legitimate. Don’t fall for the once in a lifetime get rich quick hype. This is the first filter that anyone looking to earn money from penny stocks should have.

High volumes generally equal higher quality.

As a general rule, avoid thinly traded stocks, no matter how tempting the entry price might be. If the volumes aren’t there, it’s usually an indication that something’s fishy. Sure, the asking price might be really tempting, but if you can’t unload the stock, that great deal just turned into a dead fish. Stick to stocks that are trading in higher volumes.

Think short term.

Penny stocks are different than traditional Wall Street stocks in terms of how long you hold on to them. They are considered short term investments. As these stocks are generally more volatile, you can expect them to bounce around a lot more than traditional stocks. But the bouncing is what generates the profit.

The best strategy for penny stock investing is to get in and out quickly. Once your stock hits a predicted, or desired price, sell it quickly, because chances are it won’t go up significantly more, and it could go down. For penny stock recommendations, you will realize that making quick money is always the goal. Penny stocks are not a good investment strategy to fund your far off retirement, so don’t think long term.

What’s the hidden agenda?

Unfortunately, penny stock scams are easier today than ever before with internet. Information can be manipulated to make a bad deal look good. Protect yourself and your investments. If you are seeking the advice of experts (which I recommend) ask yourself, what does this person (business, newsletter, program) have to gain if I make this purchase? Sometimes, (not always), so called “experts” and “gurus” have a secret, hidden agenda. Some are actually paid by the companies they are promoting. That smacks of conflict of interest to me, yet incredibly, it’s not illegal. So research any program or newsletter you buy to make sure the stocks are properly vetted, and the advisor has no ulterior motives.

Leave your ego at the door.

OK, just know that you will take a lot of losses investing in penny stocks. The goal is to have more gains than losses, and steadily build your wealth. You will be able to achieve that if you follow your plan. So if you think you’re about to take a hit, don’t try to act with bravado, hanging onto the stock in an effort to ‘stave’ the storm and fight it off. It’s not going to end well for you.

In fact, the best penny stock advice in this situation is to sell the stocks immediately. Take the hit and move on. If you are following your plan, you should overall still be profitable.

Limit orders limit your losses.

Market orders are not a good idea with penny stocks because they are already priced so low. If you end up doing a market order, you might end up paying a higher price for the stocks. Realize that a stock that you buy with a market order for $2.20 is 10% higher than if you put a limit order in for $2.00. That’s ten percent in profits. Pennies really make a difference.

So in order to mitigate this potential loss of profits, just keep calm and put in a limit order. Set the price you are willing to pay and see what happens. If the stock doesn’t hit your limit, forget it and move on. In case you didn’t get it the first few times I said it, make a plan and stick to it.

Above all else, remain calm.

Penny stock investing is not for the faint of heart and it’s not for the easily excitable. It’s a mind game as much as a market game.

Those who stay calm are the best investors because they don’t act out of emotion, or react to market ups and downs. Penny stocks are volatile, as we said earlier, but you have to establish a plan and then stick to it to have more wins than losses. The only way to mitigate the losses is to have a cool, unemotional, detached attitude to the trading.

What’s the plan, man?

OK, so I mentioned several times that you have to have a plan and stick to it. But how do you do that? Well, you have to get educated. You have to learn how to identify an undervalued stock from a sinking ship. You have to understand how to research companies, and understand how the stock market works. You have to know how to get in and out at the right times. In other words, you have to know a bucket load of stuff.

Doesn’t sound too fun, does it. That’s why there are lots of resources out there to help you. But how do you pick a resource, especially since some have this conflict of interest? Not to worry. I’ve looked at the top penny stock newsletters and programs and I’ve reviewed them and provided my penny stock program recommendation. Happy investing.

October 8, 2021 / 0 Comments

Penny Stock Guide

When trading penny stocks, you need to be extremely cautious. You must know the market and be able to guess when a stock price would go up and down. You must know what a pump is and must always be watching the market. Penny stock trading is not like trading normal stocks. It is a lot more time consuming and intense. People say that you cannot make money trading penny stocks, but that is not true. It just takes a lot more work and knowledge. You will learn here about how to make the right decisions when trading penny stocks and stand out above the rest of the traders. It will require a lot of hard work and dedication so do not take this lightly.

You also need to have at least a decent knowledge about how the market works. In penny stocks, the market is very different from the usual stock market. There are many pump and dump schemes out there. This is either something that you can decide to worry about, or something that you can learn to take advantage of. When you see announcements out there in emails or advertisements that say a certain stock is going to hit it big, you may just look away and think nothing of it. You may even tell yourself that it is just a big scam. Well in a way it is, but it can also be something that you can profit off of. When you see these messages of a stock being pumped or advertised, the company that is advertising it may have already bought a lot of shares and the price of the stock may have already increased. When this happens, it may be best to lay low, but if you are the first one to hear about this, you now have an edge.

The trick is to find penny stocks that may be pumped in the near future. Stock promoters can bring any penny stock’s price way up if they so much as send out an email. If you find out what will be pumped before the email comes out, then you will be able to buy before the pump. This requires a lot of research and could take a long time, but the payout is huge. You will need to mainly look for any hint of big news. If you can find out that a company is going to release some big news soon and the stock price has not yet gone up, then that stock may be pumped.

This is not a flawless tactic and you may end up buying a stock that is worthless and will not be pumped so you should only try this with any expendable income and you must also know exactly what you are doing. For people that are just starting out with penny stocks, day trading may be your best option. People love making quick cash by day trading and it may be slow with the normal market, but with penny stocks, everything is fast paced. A trick to this is to find a stock that is just beginning to become pumped up. You need to buy that stock and sell it within minutes for a slightly higher price to make money. This is the most common and quickest method. The only problem with this is that you need to watch out that the stock isn’t at its peak; otherwise you may end up with nothing.

Volume is one thing that you need to pay very close attention to with penny stocks. A stock with low volume may be impossible to sell. Even if the price of a penny stock goes up a hundred percent, you will not be able to sell it off if it does not have good volume. The volume of a stock is usually shown as how many shares have been traded that day. A number over a million is usually a good sign, but watch the stock price as well. A volume of a million is not much if the shares cost a thousandth of a penny each. Volume is very important and you should always look at a stocks average volume before trading it.

When dealing with penny stocks, you need to look out for news. News and the anticipation of news, are the biggest price movers. A lot of “pinksheets” do not have to file a lot of paperwork like normal stocks do and it may be hard to tell where the company is a lot of the time. This is why when a penny stock releases news it immediately becomes a huge deal. Good news followed by a good pump, may shoot a stock price high into the air. When the stock price goes up, then it is a good time to sell. Penny stocks usually shoot up and go back down in a short amount of time so it is a bad idea to wait for too long. Find the peak, and sell as soon as possible.

Stock trading is risky business, especially penny stock trading. The more of a risk something is, the higher the reward. You need to only invest money into penny stocks that you know you can afford to lose. Do not invest your life savings or some obscene amount of cash. When you first start out, start small. Once you start to get the hang of investing in penny stocks, you may feel safe to invest a little more. Only then is it a good idea to do so. Penny stock trading can be extremely rewarding, but there is a lot to learn out there and it is vital that you learn from both your mistakes, and the mistakes of others. The market has no sympathy for those that lose money and you will not get any breaks. Make sure that you know what you are doing and do not blatantly buy a stock just because somebody tells you that it is the next big thing.

September 6, 2021 / 0 Comments

How To Trade Penny Stocks Using The Percentages

Although we offer trading course products such as the Paradigm Shift Trading System one of the main purposes of this website is to teach you how to successfully trade penny stocks. Our flagship product is called the Penny Stock Prophet. It is an advisory service that, based upon a study that I completed recently, actually has an 82.4% success rate across a 5-month period. That means that 82.4% of the trades were successful at the highest price, usually the first day, during the 3-day period that each recommendation was followed.

Making Money With Penny Stocks

While James Connelly, a.k.a. The Penny Stock Prophet, knows how to pick them, many beginners don’t know how to actually make money with his picks. Because of that, they may be missing the profit opportunity of a lifetime.

Unfortunately, many beginners make all the beginner mistakes… They will “get in” too late and get out too early or wait way too long to sell and end up taking a loss. It doesn’t have to be that way!

I’m going to lay out some rules that might be able to help you actually avoid some of the major pitfalls that beginners run into when trading penny stocks.

Commissions

Please note that for all examples on this site, we neglect commissions. This is because commissions are so variable that it is impossible to give you an accurate analysis of any trade if we include commissions. Feel free to modify our numbers based upon the commissions that you actually pay.

The Percentages

It doesn’t matter how good your stock picking is, you are still going to take some losses. The trick to making money in spite of the losses is to always have enough winners to offset all of the losses and still leave you with an acceptable profit.

Let’s say that I have $1,000 that I’m using to trade with and I have a reasonable expectation of making 20% each time I execute a successful trade (this is reasonable expectation, by the way, using the Penny Stock Prophet Advisory Service. We actually did a study across 5 months of recommendations; see the article at “Does Penny Stock Prophet Make Members Money?”). That means that for each successful trade I will make $200.

That’s nice, but what about losses? If you look the numbers in the article I mentioned in the previous paragraph you will notice that 82.4% of the trades were in positive territory at the high on the first day of trading. Unfortunately, there is no way that you can predict which of the stocks will not be profitable but you can be observant and manage your risk.

Risk Management Rules

I’m going to share some of my rules that I have learned through around 40 years of trading stocks and options. If you use what I talk about and you take a loss, it is your responsibility, not mine.

Here are some rules that I think will help if you execute them as I intend for you to do…

Never buy if the recommended penny stock isn’t moving up on the open. You may miss a point or two of profit by delaying a minute or two to buy. But, that may save you from a 10% or 15% loss or worse.
Have a preselected stop loss point. I would actually put the stop loss order in… especially if you can’t sit and watch it. Penny stocks tend to move fast so make sure you make your stops tight enough (like 1% or 2%) so that you will get stopped out before it begins to accelerate to the down side. I’ve gotten “trapped” in more positions than I care to admit to by not obeying this rule.
Have a preselected sell point. This should be a percentage. For instance if you pay 10 cents per share a 20% sell point will be at 12 cents per share. If you have the luxury of being able to watch the stock move, you may want to let it go past that point for an even bigger profit.
If the stock reverses its price action (in other words suddenly begins to go down) or stops moving up before you reach your preselected sell point immediately sell your position.

If you want to actually start a successful penny stock trading career, I think you should try Penny Stock Prophet. The advisory service has a track record which is something that most of the people who whine about the Penny Stock Prophet probably don’t have. It’s not about what they think about the advisory service…

… It’s about how much you will make. I did a study on Penny Stock Prophet’s actual results… It’s Fact…

… The Penny Stock Prophet is successfully picking the stocks that are about to move up and based upon my study of his actual results he does so over 82% of the time. Give it a try. If you don’t think that it’s worth a one-time payment of $97 USD after you’ve tried it for a month, tell Click Bank (they handle the money) and you’ll get your money back…usually within 24 – 48 hours.

August 29, 2021 / 0 Comments

How To Diversify Your Penny Stock Portfolio

If you’re interested in diversifying your investment portfolio, it’s a given that you’re going to look for investment opportunities that will serve to enhance value while offering the safety of a range of vehicles, such that your risk of losing wealth should any portion of your overall portfolio go south is mitigated. Penny stocks might have a lower share price than other types of equities, but that’s the only difference when the subject is diversification: if you’re interested in diversifying your penny stock portfolio, you’ll be performing exactly the same exercise as you would if diversifying a portfolio made up of any other kind of investment products. The key is to seek portfolio enhancements over a range of companies and industries, spreading out your chances of earning significant gains while simultaneously minimizing your risk of loss, regardless of whether you’re investing for the short term or the long term, or whether you’re investing for growth or for value.

One proven method of portfolio diversification is to specifically seek out penny stocks in different industry segments, with different trajectories, and to purposefully place varying percentages of your available funds into each. It’s a good rule of thumb to try to limit your investment into any one stock to a maximum amount equal to 10% of your portfolio (some experts would argue that the cap should be at 5%), so that your risk profile remains as diverse as possible. Correspondingly, the companies into whose stock you invest your funds should be equally varied. Begin by researching businesses in industries which you understand, of which you have special knowledge or expertise or, at the very least, which hold a special interest for you, because the knowledge you have of the particular industry segment will be of great assistance in helping you to identify value when you find it. Regardless of the industry in which you begin to search for picks suitable for diversifying your portfolio, you should pay heightened attention toward identifying unpopular stocks that reflect this good value: when a stock is under-appreciated, regardless of its market capitalization or of which exchange it trades on, there’s extra room for growth in both share price and volume and thus, increased chances of trading for gains. Investing in under-appreciated gems is a prudent strategy for portfolio growth which you can literally bank on.

For those retail penny stock investors who lack specific industry knowledge of any kind, and who choose not to diversify their portfolio by investing in a mutual fund or ETF specializing in penny stocks, a solid guideline would be to seek to identify a target stock in each of a minimum of five separate business segments, being sure that the segments on which you focus your attention neither overlap, nor are highly seasonal. If you can further sub-diversify by finding stocks that individually are associated with differing degrees of risk, then you’ll be well-positioned to diversify your penny stock portfolio on more than one level; further, if these businesses play out in varying geographic regions, then you’ve added even another level of diversification.

Start by taking a closer look at penny stocks issued by companies which occupy space in growing sectors, such as technology, alternative energy and healthcare: such businesses suffer little to no seasonality and, depending on their specific niche within their category, shouldn’t be too dependent on any one particular customer or vendor for the on-going rolling out of their business strategy. Other sectors to consider could be as varied as mining, transport/logistics and even entertainment. When diversification is the issue, the specific industry is less important than the overall mix of equities which you are bringing together in your one basket of investments.
You’ll have to roll up your sleeves and dig deep in order to sift through all of the noise and find the penny stock picks that will make the perfect additions to your portfolio. Focus on certain companies’ stock for value, and on others for growth (another level of diversification). You’ll have to read balance sheets and income statements, as well as a host of investor materials, in order to weed out the non-contenders in the industries which you’ve chosen. Then, once you’ve arrived at a shorter list of investment candidates, you’ll have to sharpen your focus to narrow things down to your optimal investment choice. Pay close attention to this methodology, because with the next industry you move on to, you’ll need to perform the same exercise again.

It’s of great importance to this process to ensure that your research and analytical skills are sharply honed. Take a very close look at your chosen picks’ stock history to make sure that you’ve gotten a meaningful feel for its normal rhythm and movements: without knowing what’s typical for the stock, there’s no way to recognize when the stock may be trending, or whether it even has prospects to do so. Plot the stock’s history over time on your charts (or access charts from your full service broker or an online finance site such as yahoo finance or free real time), and then plot its most recent movements, comparing the two; be sure to look for any recognizable patterns which may help you to evaluate the optimal time to buy in, or to classify the stock as a non-starter. Investigate market cap, volume, net asset value, P/E ratio and book value, and compare these to industry norms to see where the company is situated in the pack. If the trend for growth is evident and the stock appears to be undervalued, chances are good that you’ve found a keeper. To verify your hunch, then, spend just a little more time looking into company management to gauge whether they’re generally considered competent, and whether they’ve got the chops to lead the company over the threshold to the next level of success, and don’t forget to check with the SEC to read company filings, if any are available. If all looks good, place your order, and remember: while all forms of investing are associated with certain risks, the risks of penny stock trading are significantly lower than when trading in other types of equities simply because the costs of buying in are so much lower. Hold your position while continuing to monitor your shares closely: if your initial analysis proves correct and the shares move in the right direction, you then have the luxury of deciding whether to increase your holdings, or whether to simply bask in the satisfaction of knowing that you’ve added portfolio value and diversified at the same time. When you’re done patting yourself on the back for a job well done, get out there and do it again with another pick from another industry, reinvesting your gains to maximize portfolio growth. After all, isn’t that what it’s all about?

July 28, 2021 / 0 Comments

Buy and Hold Stocks for the Long-Term

It’s every investor’s favorite dream – buying into stocks and then relaxing as the stocks do what needs to be done without your losing precious sleep. Such stocks are fondly referred to as forever stocks, rightly conveying that you marry them, and the mutual love affair lasts your lifetime.

What makes these stocks tick is that their growth will be consistent throughout the year, year after year, and they will boost earnings without posing risks normally associated with lesser stocks. Far from being a daydream, such stocks do exist and they make you a decent pile of money.

Investors would do well to recollect the famous Oppenheimer survey that discovered that the S&P 500 had an unbroken run of success for two decades. This is not to imply that such stocks do not ever see declines, they do and when that happens you might just be tempted to let go of them to cover losses, but retaining these stocks would be the greater challenge presuming that your interests are spread out over the long term.

The beauty of forever stocks is that they are tough and resilient and do a pretty good job of holding up even when the market is experiencing peak volatility.

Research the market (and the companies obviously) and carefully select the ten safest stocks that you would expect to record consistent growth through a decade or more of your life, and compare their past performance with the S&P 500. If your choice is correct you may notice that the listed stocks may have dropped appreciably lower than the S&P 500. That’s the sheer power of forever stocks.

The point is that the growth recorded by theses select stocks more than makes up for the losses that the market would otherwise force you to meekly accept. Just to cite one example, MasterCard experienced a spike in earnings in August this year that had share prices shooting by 13 percent, and that must have been cool comfort for happy investors when the Dow Jones Industrial Average crashed 500 points the following day.

If you thought that these spikes are dramatic you may have missed the growth spread over a longer period which is even more impressive registering 25-30 percent compared to nearly 10 percent of the S&P.

The forever stocks may sometimes flatter to deceive and seemingly reputed and hitherto financially sound companies have been known to bite the dust – Enron, WorldCom, General Motors – to name a few. In these instances forever got replaced by free-fall.

If you are wading in unfamiliar territory in identifying forever stocks, here’s the low down on zeroing in on them:

Such companies will be having a rock solid advantage over the competition in their sector or may even be a monopoly.

These companies will reward their investors with extremely generous dividends.

You will find these companies buying massive shares of their own, kind of like reinvesting in themselves.

Once you have such a company in your sight, you can rest assured that you will be well on course to making some serious money in the long term; your immediate priority would be to buy into these shares and to put them away for a couple of decades. Financially, your decision would be oozing with common sense because being strong companies you can expect them to take adequate care of your interests, and of course success breeds success over a longer time span.

To cite a valid example, there’s Philip Morris, the tobacco major with serious investments in at least fifteen global brands spread out over 180 nations. It might be awe-inspiring globally, but you won’t find a more shareholder centric company that has presided over dividend distribution exceeding 39 percent at the conclusion of 2014, and the company also repurchased shares exceeding 16 percent of its mammoth shareholding, thereby contributing to a quantum jump in 20 percent in its earnings per share.

As the wise investor may surmise, buying into this company assures a lock in of at least 4 percent, with further increases expected in the pipeline. As the company repurchases its shares more aggressively in the coming decade you can expect a healthy return on your investment. The product is also one which is high in demand which can be expected to increase its market penetration substantially in coming years. So the investor can visualize the kind of robustness and stability that ensures a good night’s sleep. This is not to imply that all forever stocks behave similarly, but the downturns will be rare and sporadic, not the norm.

The last word

If you invest in financially robust and strong companies you may have found the key to maintaining the stability of your amply diversified investment portfolio. These are companies that withstand global fluctuations easily and preserve their financial strengthen, and will even improve on their financial foundations as the years and decades roll by. In a vastly volatile stock market it would be a wise decision to track down and invest in companies that will not panic at the first sign of trouble. Our job is to create awareness in investors on what constitutes safe investment and identifying the investment that assures steady growth whatever the market risk, and forever stocks inspiringly lead the pack.

June 14, 2021 / 0 Comments

How Can You Get Rich Buying Stocks

Many beginning investors are wondering the same question: how can you get rich buying stocks? Well, how does a person get rich with anything? They develop a game plan, meditate on it and then take action. Stocks work the same the same way, although you do need to think about whether you want to make money for the short term or the long term.

Developing a Gameplan – Your First Step to Getting Rich with Stocks

If you want to get rich with stocks, you need to think about how much money you plan on investing in mutual funds. Afterward, you need to think how much liquid cash you want on hand for stock investments.

This is a very important step, as most investors spend up all of their money when the market is good. However, even when the market is bad there are winning stocks… sometimes even more so. But if all of your funds are already gone, you cannot take advantage of these gold mines.

Identify a target to sell while also defining your stop loss

If you want to limit your losses, make sure you define your stop loss. This is an arrangement where stocks are sold after hitting a certain price.

Buying Stocks for Long Term Investing

Some stocks will be profitable over the long haul. These are the ones you want to keep in your portfolio for maybe five or ten years. At the end of that period, you will make tens of thousands.

In addition, include a few high-risk stocks. These are the ones that are not doing so well today, but may turn out to be profitable in the future.

Getting Rich with Mutual Funds

When it comes to mutual funds, you will want to stick with systematic investment plans. By doing so, you can benefit from the power of leverage. But this is assuming you back up your plan with a withdrawal strategy… selling your mutual funds after you have reached a certain amount. You can then use the proceeds of your sale for stocks or another type of mutual fund… ones that are fixed income.

Gold Investing

Gold has always been a valuable commodity. And even now it can make you a millionaire if you play the game right. To do so, you must realize that gold and stocks run opposite from each other. Therefore, you should invest in gold mining stocks. Gold ETF is an example. It is a gold-based mutual fund specifically designed for the commodities investor.

Consider Being Contrarian

A good investor does not always go with the flow. Warren Buffet is an example. Unlike many investors in the 90s, he did not put his money on Internet-bases stocks. As a result he did not lose like so many others during the dot com crash.

Two additional concepts every investor should know:

Power of Compounding

Compounding occurs when you reinvest the interest you gain from your previous investments. For instance, if you invest one thousand dollars, and you receive ten percent interest on the principal, you will get one hundred bucks interest in a year. If that interest gets reinvested, the next year you would end up with $1,110, allowing you to earn $10 more in interest. If you can stick to this plan, you would double your funds every 8 years.

Even Albert Einstein commented on the power of compounding. He felt it was mankind’s greatest idea, as it allows him to accumulate wealth in a systematic way. Indeed, if Einstein thought compounding was a decent strategy, there must be something to its magic.

The concept becomes even more effective when you remain disciplined.

In any case, to get started with compounding, set up a series of accounts where fixed amounts get deducted from your account.

Dollar Cost Averaging

When you use a fixed amount to pay for an investment, you are engaging on a unique type of averaging. In the investment world, it is known as “dollar-cost.” People that engage in this strategy spend more when stocks are down and less when they are not doing well. For example, say a person invests $500 each month for $50 stocks. During their first purchase, they buy ten shares. If the stock rises to $62.50 next month, you would only purchase 8 shares. But if the stock falls to $41.67, you would get twelve shares, (minus the transaction fee).

Setting up regular investing mechanisms is relatively easy. It does not matter if you are investing in stocks or mutual funds, as the dollar-cost strategy works the same. If you use the strategy for stocks, you can apply it to individual shares or more unique arrangements. The exchange-traded fund is an example.

So, how can you get rich buying stocks? Use your head and develop a strategy that meets your financial goals. Most importantly, never invest more than what you can afford. While stocks can be very lucrative, they are still a gamble. Do not take this gamble if you cannot afford to lose what you put in. In other words, view your stock investment funds as “fun money.” If you have no problems spending your funds at a restaurant or even on a vacation, then that amount should work well with your budget, (as you are not expecting a return). By using this approach, you will not be disappointed when or if the market fails. And when it is successful, you will feel even more proud of yourself, as no other “fun” purchase can generate extra income.

May 30, 2021 / 0 Comments

Bar Charts

Bar charts are a bit of a technical subject. Although this does come under the heading of technical analysis (no pun intended), we’ll try to keep it simple. If you learn how to use it well, you’ll be that much more at cause over emotional news, analyst recommendations, etc.
When we say bar charts, we mean the “price and volume” of a stock’s chart. A stock’s price displayed on a chart with the volume for that day, week, etc. Like this:

The vertical bars represent the high and low of the price for that day, week, etc. The horizontal slash represents where the price ended at for the day, week. Etc. But you already knew that, right?
The volume bars at the bottom of the picture represent the total amount of shares traded for that day, week, etc.
Both the price and volume have moving averages that look like this:

These lines give you an idea of what the average price (or volume) of a stock is relative to the last 10 days, 50 days, 200 days (or weeks), etc.
Here are the basics of how to interpret these two pieces of data on bar charts; both volume and price:
When price goes up and volume goes up, it indicates strong buying demand.

Volume is a footprint left behind by the institutional investor. After all, it takes millions of dollars to move tens of thousands of shares to increase the volume and price of a stock.
Notice how the volume of the huge up day in this graph looks like it’s more than double the average volume. That’s institutional buying power at work!
When price goes up and volume is average or below average, it points to mild, tepid buying.

There is some buying taking place, but the institutional investors aren’t rushing in to buy the stock. If they were, they would leave their volume footprints.
Likewise, when price does down and volume is average or below average, it indicates mild, tepid selling:

On the other hand, when you see the price go down with heavy volume, watch out!

The institutional investors are hitting the exits, and hitting them fast.
As discussed in Stock Breakouts, volume also plays a key role in breakouts. When a stock’s price is breaking into new high grounds coming out of a sound area of price consolidation, you want to see massive volume. The bigger, the better.
Why?
Come on, you know this one. Right! The institutional investors!
When you see daily or weekly volume 354% above-average on a bar chart, someone managing lots of money is very interested in that stock.
In addition to these tidbits, look to see “tight” price areas. Like this:

When we say tight price areas, we mean small price variations from high to low on a daily or weekly bar chart. The price bars look shorter than the usual daily or weekly bar. This tightness points to quiet accumulation by institutional investors. Wide and loose price areas point to erratic buying and selling, and isn’t the best indicator in the world. Like this:

*Digression Alert*
Have you ever played a game of Spoons? It’s a card game where you sit around a table passing cards to the next person, in a circle. There’s a set of spoons in the middle of the table. There is one less spoons than there are players, so that one player will be left spoon-less at the end of the game.
As soon as someone gets four of a kind, he or she grabs a spoon. Once he/she snags that spoon, all hell breaks loose as the other players scramble and scratch their way to spoon-ownership.

We’re going off on this “Spoons” tangent (aside from the fact that we’re avid Spoons players) because it can be compared to tight and loose price areas on bar charts.
A tight price area is like the calm and collected Spoons strategy. Once you have four of a kind, you silently take one of the spoons while no one notices. That’s what the institutional investors are doing. Silently collecting up shares when no one notices.
A wide, loose price area on a bar chart is like the feverish scramble of all of the players after you slam your first on the pile of Spoons and yell at the top of your lungs “I’VE GOT A SPOON!” When the whole market is aware of the stock, emotional buying and selling enters in, which forms wide and loose patterns.
So there you go- you now know more about price and volume action- AND Spoons!
As mentioned in Stock Bases, you want to see a dry-up in volume in the lows of a base. This means that most, or all of the selling has taken place and is now exhausted.

As you can see in this picture, most of the volume in the tight price area is below average. When the stock breaks out the area of price consolidation, the volume kicks in.
Monitoring price and volume action is a good hedge against emotional news and market analysts. It gives you a factual picture of what is happening with the stock. Use it to your advantage! Your portfolio will thank you.
We’re the Stock Marketeers, and we approve of this message.
Return to Technical Analysis from Bar Charts

February 23, 2012 / 0 Comments

What Investing in Penny Stocks is All About

Everyone is getting the hang of the stock market. If you want to get the feel of it but are low in your resources, then penny stocks could just be the right investment for you. Doing it right can make you a fortune and if luck is not on your side you will just have a minimal loss.

Like in all stock trading you just have to study the market well and use some guts feel. Learn the right way of getting started and choosing the right penny stocks. You just have to know what to buy, when to buy and when to sell.

How to Invest in Penny Stocks

Many companies that have started as small companies started with penny stocks. These companies have great potentials of becoming big. They just have to get started and make it big in the industry. Once business picks up then the company increases the price of their shares of stocks.

Likewise, being new in the stock market, as investors you should learn about penny stocks first before hitting it big in the stock market. You could get information about penny stocks from stock message boards, stock newsletters and blogs on stocks. Penny stock brokers can tell you everything that you need to know about penny stocks. The stock broker assisting you can help you make good penny stock picks. To get started you have to get in touch with a stock broker and open a brokerage account. These stock brokers know the best penny stocks to buy as they always have a list of penny stocks that are very in demand in the market. A careful study of the market and putting in some guts feel can lead you to the right direction in your investment in penny stocks.

It is of utmost importance that you have a plan on your purchases as well as when to sell your stock Always resist the temptation to hold on to your penny stocks even if the price seems to be increasing greatly. Due to the instability of this type of stock, increases in value are can be held as indications of a good, profitable and stable investment. There is always a high risk of the value of these penny stocks to drop tremendously thus causing you to lose your money. The success in trading is to buy these stocks, make your profit quickly and move on to the next trading.

How to Get Good Penny Stocks

Penny stocks are shares of stocks that companies sell for a fraction of a penny to $5 each. There is a lot of information we could get about penny stocks from popular stocks message boards. We get to know which companies who sell out these stocks are mostly picked and are good to invest into from these stock message boards. Through these stock message boards you would get to know the trend of these stocks so you could decide if you have to make a trade immediately. These stocks make and lose money within hours or even minutes, meaning the investor has to be on top of what’s going on with the stocks. By reviewing stocks message boards and free penny stock alerts you will know which penny stocks are the best in the market to buy. Aside from giving us information on what to buy, we also save on time that we were suppose to spend to find good penny stocks to buy.

There are penny stocks newsletters that you can use to make your pick on what penny stocks to watch. These newsletters always have penny stock pick updates that can help you in deciding what penny stocks to buy. They also guide you in your decision in selling out stocks that you have and holding on to stocks that have great potentials of hitting it big in the market.

The information you can get hold of about the companies selling penny stocks are very important. Consider all information available before you decide on what stocks to buy. Information like how the company is making money and forecasts of the company and their foresight on where they will be in the near future are very important details to consider. These pieces of information have a great bearing on your decision and what you will end up with in your plans of investing in penny stocks.

How to Trade Penny Stocks

Penny stocks are traded like other stocks, by placing a purchase or sell order for the stock on your trading account. Since these kinds of stocks do not move as much as other stocks, it is essential to pay attention to the movement and quantity in the stock market.

It is also important to look into all the things to consider in a stock before deciding on buying it. You can ask the help of an online stocks counsellor to help you decide on the best penny stocks in the market. In addition, you can check online websites for stock trends.

It is also vital to note that penny stocks are not found listed the NASDAQ or the New York Stock Exchange. They are found on pink sheets penny stocks listing. These stocks usually does not have much information on the companies offering them and you just have to do a lot of research to get the much needed important information before you decide on what to buy.

In general, investing in stocks entails great risk especially if you are just beginning to learn the ins and outs of the trade. Whether you gain or lose from your investment greatly depends on how you play the stocks. Always remember that your best weapon in making good and beneficial decisions in penny stocks is to do a good research first before deciding on what to invest. Bear in mind that even how little it may cost, the money that you put in is hard earned and should be invested well.

February 15, 2012 / 0 Comments

How to Properly Invest Your Money in Penny Stocks

So you have finally decided to use the money you have saved up and invest in the stock market, particularly, in penny stocks. Believing that the only way to make it big in this world is by building a business or reaping the fruits of your investments, simply relying on your salary from your job won’t do.

Employment is always uncertain and there is no telling when the company you are working for might sink, regardless of how profitable it is today. It is often recommended that if you have some money set aside, you can invest it in the stock market as long as you know what you are getting yourself into.

Penny Stocks: an Overview

If you have just recently gotten into the stock market, then you might probably have not yet learned of what are penny stocks. In very simple terms, penny stocks are investments in companies whose shares are under $5. Typically, this is how the Securities and Exchange Commission would define them. However, there are other forms of investments where the ceiling for a penny stock would be $3 and under. While they are considered cheap, this type of investment is considered to be risky and a lot of brokers would tell you to avoid from shelling out your hard-earned money in it.

Then again, there is some proof that penny stocks have been the viable option in the past and made investors earn a lot of money. This is the main selling point for a lot of companies who are looking for investors in their company. They disseminate information like they are the “next big thing” or the “future Microsoft” which in turn enthralls potential investors to them.

Penny Stocks: The Downside and Things to Avoid Doing

Seasoned investors and brokers often avoid penny stocks due to a lot of reasons that give it a bad reputation. Truth be told, the reasons are actually valid and can give reasons for concern for any type of investor. For one, if a company is selling stocks at a very low rate, it can either mean one of two things or even both. On one side, the company might already be losing money and is looking to attract investors, which can be a reason to lower investment cost. At the same time, said company might already be bankrupt and is just cutting its losses. You would not even know about it until all your money is gone since penny stocks to watch are being regulated with difficulty. Legally, these penny stocks companies are not doing anything wrong which is why they are untouchable until they file for bankruptcy. So, before you invest your money, make sure that the company you are investing in isn’t a sinking ship.

Another cause for concern with penny stocks is the way some of the companies operate in terms of selling their stock. Since the SEC permits it, companies often sell stock to offshore clients at a very low price provided that they sell it back to other investors at a premium rate. This practice is frowned upon, although it is still something that happens today still. The companies will use attractive (often false) information to garner the attention of potential investors as well as use hard selling with experienced sales personnel.

Although a lot of companies on the pink sheets penny stocks are slowly making a name for their own sake and becoming reputable, a lot of the so-called penny stock corporations abuse the notion of making easy money in this type of investment and lure a lot of the uninformed massed. In truth, they are just banking on the hopes and dreams of investors that the money they spent will be for the next big thing in the particular industry. Of course, this often leads to disappointment for the investors. You also need to avoid getting tips from magazines or articles that try to sway you into a particular direction or a company to invest in. More often than not, the very company you are thinking of investing in pay those who write these recommendations so that they will appear to have a very good penny stock picks reputation towards the investing public.

Penny Stocks: What You Should Do

As an investor, there really are a lot bases you need to cover first before you hand over your money to a broker or a penny stock company. The key is to get information about the particular company you are interested in and to get lots of it. Remember, the more information you can gather, the better you will be in making an informed decision whether you should proceed with your investment. Always do a lot of research and investigate on the companies you are considering to invest in. Make sure they are first and foremost a legitimate operation, followed by learn about penny stocks and their status in the SEC as well as if there have been complaints filed against them or if they have had history with violations and the like.

Another important matter to consider with investing in penny stocks is to learn of its liquidity. This is extremely important because it will determine whether the stock can be easily sold when you want to do it. If a stock isn’t liquid, this means that you will have a hard time in disposing of it. In turn, you will need to lower the selling price just to attract the attention of other investors. This of course will cause you to lose more money than you already have.

Penny Stocks: Conclusion

In conclusion, penny stocks are not all that bad. While there are those trying to dupe investors into making a bad investment, there are still some who are worthwhile. The important thing is for you to figure out those that are legitimate and separate them from the unworthy ones. It may be tedious and troubling to do but it is time well spent for money that will be well invested. You should always consult with your broker before making any decision regarding your investment strategies.