Penny Stock Tips: How To Pick Penny Stocks
Want to know how to buy cheap stocks, like Pink Sheet penny stocks? I’m going to give you some tips on how to pick penny stocks, how to find penny stocks that will be good penny stocks for 2011.
These are ultra-dangerous investments, just speculation. There are many scams in these markets. Small businesses are easier to manipulate and are easy prey for short sellers.
For example, see my video “Anatomy of a REAL Pump and Dump” on YouTube.
These actions need promotion to move them. This promotion can move them whether they deserve to raise or not.
penny companies
Penny Company managements generally put the investor first, right after their own wallets. Large salaries and benefits may be paid. They can raise money by using massive dilution. Dilution is selling shares below their value. This reduces the value of your shares. They can dump their own shares on the market. These companies can also crush the value of their shares by doing ruinous reverse splits. The management may simply leave the company.
what to look for
Look for value first by finding companies selling below book value. This may be impossible if information is missing. Look for low market caps. Look for insider buying. Look for preparations for development, reorganizations
If you have found value, look for the potential thrill. Take out your crystal ball, what will happen? Anticipate and predict. Call the company for more information, but be careful. Is the company doing research, bringing out a new product, looking for a deal?
How stocks move
Stocks move in an accumulation – margin – distribution pattern. You want to buy when the stock is piling up for an upward move. Shop with the smart money. Avoid chasing price – look for good cheap buys. Penny stock companies often have big swings = momentum.
look at the painting
Look for companies with low market values. Look for stocks that are moving sideways in patterns that suggest they are building up. Watch for breakouts to the upside.
Don’t chase the price. I like to bid low on the stock, looking for a bargain. If I lose a share, there is always another behind. Don’t worry about the moves you miss, rather spend your time looking for moves.
Warning: these shares can turn into a penny. Don’t get carried away by the news. Avoid actions that are being promoted, such as spam actions.
when to sell
Sell too early! Sell at the first sign that an uptrend is breaking. Do not ask why. You’ll find out six weeks later when the price has dropped significantly, too late to sell.
Never average down on a penny stock! The fact that the stock is now halfway through its peak means nothing. The action can go to zero. Live to trade another day.
The biggest penny stock tip is to keep learning more. Professional traders stay on top of their game. They study everything there is. They know that correct information is worth tons of money. Learn from your mistakes and your gains.