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.
