Penny Stock, Penny Stocks, Penny Stock Tips & Penny Stock Picks & Newsletter
It happens on many occasions for you to see those ads claiming outrageous earning with penny stock trading, and one question starts bothering you: “Are all these for real?”. For instance, there is one firm promising 3000% return on the investment in penny stocks, other claiming 1200% day rate of return, and these examples can go on and on, while you are left wondering if these claims are for real. Now the obvious answer will be also a question “If these all were for real, wouldn’t all investors reach for these investments as well?”
You can be sure that if penny stocks were listed next to the other major stock markets, no one would be allowed to advertise such fantastical earning, simply because it would be illegal. But why do these penny stock companies advertise such big returns on several of their investments?
Well, they do this because they have one purpose in their mind: to attract new comers who are willing to invest their life savings determining the make investment into risky stocks. There are of course, penny stocks that can bring high returns of the investment, but to figure out which these ones are, is definitely a tough thing to do even for the most experienced brokers.
So, the conclusion here goes for the fact that these earning claims that you see in the ads spread all over are nothing but bullies. More than this, if you want to venture in this world of penny stock trading, you should be from the very beginning aware that you are about to embark in a risky business.
Another thing that can be drawn to your attention is the actual trading of these types of stocks. Once they are traded on ‘pink sheets’ the question that follows is “Who makes a market in these issues?”. Well, in many cases, we talk here about those firms which buy the stock back from the investors. Many times a gap appears in the ‘bid’ and ‘ask’ prices when trading these stocks, and the differential between these prices is what brings the profit to the firm which is involved in the stock trading.
Many penny stock companies will resort to other means to spread mischievous claims about these earnings: they will hire PR firms to distribute these claims as being a huge success with buying a specific stock in the attempt to raise the price higher than expected. These PR firms will be in return paid with stocks from the company, so it is in their interest, too, to inflate the ad.
This type of technique is often known as ‘pump and dump’ technique, which is unfortunately very widely used in penny stock investing. One piece of advice: do not ever let yourself fooled by these ads, especially that it is your hard money at stake. At the most, you should get yourself properly educated before making any wrong move in this industry.
If you think of investing in penny stocks, then you should know that there are some things that you must master before jumping into this type of investment. You will find many terms that you must have a good comprehension of, course of actions that need to be taken at the right moment and a lot of information to gain related to the specific investment and company. One concept that you will meet with in this initiative is the high volume stocks. You must know that not all stocks come as high volume, but knowing which these ones are, can make the difference in the penny stocks investment.
You should understand what exactly makes stocks be of high volume. These stocks are defined by a large number of transactions that are performed over a period of time and the opposite goes for low volume stocks that see only a few transactions. The average investor would probably assume that once a stock sells well, then it will continue in the same way for the future.
But the same way you have concluded this, there could be others like you reaching the same conclusion and being in the look out for this stock. This assumption might be correct, but you shouldn’t forget about one aspect: it is worthwhile doing some research before buying the high volume stock. This is because the stock might have reached in the meanwhile a significant value already and then you would be left wondering if this one would have any chance of rising further in value.
Another thing that you should take note of when it comes to investing in high volume penny stocks, is to never get so closely focused only on these stocks as you might miss some other sings indicating danger in this initiative. In order not to reach to this unpleasant situation a good idea would be to be very well informed. You must read the news reports related to that company and find out about its stocks. There will be as well experts opinionating on how the things will evolve for the future. Cumulated with the knowledge that you already have you should next draw your own conclusion and base your moves on this.
There is the natural law of things to point out at you that what goes up will eventually go down, and this law can be applied to penny stocks trading as well. Do some research and find out those stocks that have a good market depth. This is another way through which you can define your investment as a good and profitable one or a bad decision. If you have reached the conclusion that penny stocks goes down merely to speculations, then you got it right. But if you couple this speculative nature with the right information and clues then you have good chances to be successful in your transactions.
When you plan to invest in penny stock market you must be prepared to confront with a gambling situation. But as it happens in this type of circumstance, we can find here people who plan to invest for long and people who get involved in the game just for the sake of trying their luck. But regardless to which category of such gamblers you belong to, stock market has a little bit to offer to each one these categories. You can invest large sum of money and expect to have a great return of this investment, or you can decide to go first with small amounts and expect also a good return of them.
The amount of money doesn’t make the importance of this investment less considered, since this money comes from life savings of every category of investors. This is why people need to show patience and caution to make sure that they receive a fairly great amount of money for their penny stock investment. Once the returns become satisfactory for the investors, they will be tempted to invest again, although they should see the amount of risk to which they expose with every step they take into this type of trading.
One can risk losing all their life savings considering that these stocks do not go by the regular patterns of trading business. More than this, if you do not get in some way connected to the company’s profile, then you face a great deal of risk that can compare to throwing all this money out on the window. Getting connected to the specific company that has placed its stocks for sale is a big step towards a successful trading.
As the name suggests, penny stocks always come in a low value, this is also the reason they do not appear on the share market listing. It is also this low value that draws many people to invest in them. Everything might go perfectly until one day when the situation changes and then make this stock disappear into the thin air. This means the disaster for the investor in penny stock trading.
It is therefore important to have the right knowledge on the specific time when you can get hold of a penny stock and to learn about the evolution of the volume trading and how high this one has ever been. This will determine you to make a chart where speculations can make room for your further transaction. So, the answer to the question in the article title goes for your availability to risk, your power of speculation in accordance to the given information of the company in question, seeing also how the stock market fluctuates in this type of trading.
In your search of making good profits in trading market, you realize that penny stock investments are quite a great way to turn small capital into larger profits. But as it happens with all the investments, you should first educate yourself on what exactly you look for and what are the ones that you should stay away from.
The following examples would help you avoid resorting to unfortunate solutions:
- Do not fall for any person who wants to sell investments over the phone. All these people will operate merely in their interest and while persuading you to complete an investment the money would go into their own pockets or the ones of the company they represent. Good companies would never resort to these phone calls transactions whereas the poor and unstable ones would go for these types of tactics since they are desperate to find ways out of their sinking situation.
- Do not opt for companies presenting a low trading volume since these ones do not have too much positive interest.
- Do not fall for the hot top of the day. There are many promoters who purposely provide tips said to be the hottest in penny stock trading. This is where various rumors have their origins, while being spread all over the place – over the phone, form one person to another, or even social gatherings.
- You would better invest within the area that you have solid knowledge and do not rely on these rumors. More than this, you must know by now that if a penny stock is known to reach the highest peaks, this information won’t definitely be delivered to you, as there are the selected ones who will grab at the opportunity and you won’t even hear about it unless it is already consumed.
- Do not fall for those penny stocks that are guaranteed to go up. There is no such guarantee especially in this industry. Most of those resorting to this strategy are either promoters working for the company interest or self-serving brokers. It is again better to investigate on your own the specific company before starting to invest.
- You should stay away of the belief that with penny stock you can invest in a stock that has dropped dramatically. Many would go for the thought that it can not go any lower than this or that it makes it be a good bargain simply because it went so low.
- Do not go for stock saying that they are commission free because these ones are sold directly from the company or their promoter. The commission is always included in the price that makes the required price not a realistic one for that particular investment.
- Do not mistake warrants and rights for penny stocks since technically speaking they can not be considered this way. They are a derivation of an investment that relies on company’s previous shares. They can be taken for penny stocks as long as they are listed within stock pages and more than this they are traded for pennies very often.
There are a lot of ads spread all over the internet promoting the lucrative business of penny stock investments, many of them even claiming for huge profits but none of them specifying how much work is involved in this enterprise.
If you consider investing your money in this market, make sure first that you read the following facts before jumping in this experience:
- You can easily fall for all sorts of traps that are purposely laid out there by specialized firms which make their money on placing low stocks with push up values for whoever buys them. They will make use of all sorts of means to persuade you into buying but what you should know mostly is that these firms are paid in shares of those stocks they try to sell.
- Another thing that you should take note is the transparency of a company in its reports. If there is no way that you can see the reports on the company that you want to invest in, then you would better pay them a visit and check with stock situation and penny stock information right there. Since not all the penny stocks are regulated by Securities and Exchange Commission, it means that these companies are not forced to submit their reports that reflect situation on assets, changes in cash position, and so on.
- Since penny stocks are not required to be reported, it can happen for them to be very often in financial limitations and this fact will also not be revealed to the prospective investors. In fact it has been considered that 7 out of 10 penny stock companies will go bankrupt in a period of 3 years. Not to mention that with the limited assets of these companies you will more likely not get too much in the event of getting liquidities instead of cash.
- It can be very hard to make the right penny stock pick as long as there is no access to companies’ reports. Many of these stocks are generally invested in through the recommendations of others, such as honest sources that operate with reliable penny stock information.
There is a great possibility to earn good money through penny stock investment, although this opportunity comes more for a limited circle of experts. And you can bet your life on it, that they won’t ever be interested in selling good tips to you, as a new comer. It is very hard to access the relevant information on your own on a specific company as long as there is no transparency on company’s reporting.
Another idea would be locate that honest penny stock supplier who has both experience of and access to the quality information. In this way you might make yourself good money in this market. It seems that after all, this can be the only way to make serious money while staying away from deceiving and treacherous means promoted as ideal sources to help you gain huge.
Penny stock investment is an area where many individuals would like to get involved either as big time or small time players. “Players” is a good term to use for these types of investors, considering that penny stock investment is quite a risky business to get involved in. But in our search to secure a better future we are willing to give it a try to everything that can maximize our financial efforts, and if this one can be done through investing in penny stocks, then so be it.
It is true that many of us have been caught up by all the ads promoting the tremendous earning that one can do once investing in penny stocks, although none of these ads says how you can do it in a successful way. All they say is that penny stocks will give a higher return of the investment helping you for the future to make good profits as well.
While these ads do not deliver any information related to how you can actually do it, you should know that there is plenty of information available online on how to work with these penny stocks investments. This volume of information will point out at you some important aspects that you should take in to account especially when you are a new comer.
First of all you should get very well informed on the company selling the penny stocks. Lacking this information will not make things any better, in fact this will act as a hindrance in your investing initiative. Once the research on the company is completed, you would know what decision to make in order to perform a good trading with less investment and satisfactory profit.
Lacking the right information can lead to putting your investment at risk. There are however, many investors who rely mostly on their experience in the field, but armed with only this tool might prove not to be efficient at all times.
Another source of information for your penny stock trading is the experienced penny stock traders who operate as consultants helping you with the righteous information on this topic. Unfortunately, you might come across several fraudulent companies which use false information or false consultants who are paid to guide you to the wrong penny stock trading. In this case, you are better off to rely on your own power of getting the information from the company itself or by resorting to reliable penny stock brokers.
Getting the information is the way that can guide your steps to a successful penny stock trading, which for a beginner will be quite a big deal, not to mention that this success would mean your first brick in building the wall of expertise that grows with the right information, practice, knowledge and reliability in yourself.
Many people in their desire to invest in penny stock and earn good money have fallen victims for penny stock scams and now they seem to be very susceptible in this area not knowing any more which tip or advice to listen to. There have been always tips coming either by word of mouth, in message boards, or emails saying that a specific penny stock will go high and they have invested money only to see that it was quite a big mistake. After this happens, they will throw the blame on anybody else, except on themselves. But to tell you for sure, there is no one to blame in this thing other than you.
This article will put forward some methods through which you can protect yourself against these scams:
- Always check the message boards with more caution
One thing that you should know about message boards is that they should be seen as a two sided tool in stock investment. One side shows them as a great source of information while the other shows them as the lawn where lambs (the beginners) rest as a prey for the wolves (the stock scammers also known as ‘pumpers’). On many occasions these ‘pumpers’ are those people paid by penny stock company with the purpose to have them inflate the price and make the stock be invested into. Therefore be more cautious when looking to use a specific type of information before making any decision to move further.
- Do not pay any attention to emails that relate to penny stocks
If there isn’t a subscription on your behalf to receive penny stock newsletters related to this matter, then do not pay attention to the ones that come ‘uninvited’. All the tips emailed to you in this way are merely empty words that shouldn’t be minded. The ones who send these emails have the purpose to create alluring prices of the penny stock, but they will get paid by selling their shares at a profit leading as such to the stock price downward.
- Get yourself involved deeper in the research work and take the whole responsibility on your shoulders
It is always good to go by your instincts especially when these ones are doubled by knowledge and a large volume of positive and constructive information. In case you come across a penny stock that might look promising, do not go for this shiny image. Do some research on this specific stock before making any hasty decision. Check with the company’s profile and see with what things they have come on the market and check for their potential. Do not overlook the importance of cash flow and the volume of trading they had in the past.
Check also their financial status; are they deep in debts, have they ever filed for bankruptcy and so on. You will be in the position of making a decision related to that penny stock and whether or not this one is worth investing into.
When it comes to stock trading, there are generally two major stocks that one meets on this type of market: stock trading and penny stocks. Penny stocks are those shares that belong to small companies (having less then $200 million capital) that are issued for less than $5, although these ones can be on many occasions issued for $1 or less than $1.
One can find the definition of US penny stocks with the Securities and Exchange Commission as being those low priced and speculative securities traded on places such as Pink Sheets and OTCBB. Compared to these stocks, the regular ones belong to blue chip companies that issue these shares in a perfect compliance with the listing requirements of the specific stock exchanges registrations.
The following aspects make one stock trading differ from penny stock:
- Risk factor. Looking at both these stocks from this perspective we find penny stocks belonging to very risky category of investment. This is the reason why many traders have turned into speculators in an effort to inflate or deflate the prices of these stocks leading to big differences in the profits that are generated through the risky trading.
- SEC rules abiding. As compared to stock trading, penny stocks do not abide by any SEC rules, as there are less restrictive requirements for their listing. More than this, penny stocks are not that transparent in transactions, meaning that there is a lot of room for fraudulent trading.
- Disinformation is at large. This is another aspect that makes penny stock differ from regular stocks. Many companies resort to disinformation in order to get their share prices fluctuating to earn themselves more money.
- Trading locations differ. It is known that penny stocks are traded at over the counter level, and not at traditional stock trading floor. This makes them be very sensitive when it comes to market fluctuation.
- The strategy in investment initiative is different. There are many strategies involved in penny stock investment with various goals that need to be achieved. What makes this different from the regular stock trading is that these strategies are more in the hands of speculators who are searching for immediate profit in the detriment of the inexperienced traders.
When you consider investing in penny stock market, it is better to be prepared for the worse rather than for the best. It is a highly risky enterprise in investing on these shares and the best thing to do it so consult an expert to guide your steps to the right direction. This will require also a great deal of caution that will keep you away from fraudulent traders who might impress you with huge earning claims just to entice you into investing your life savings.
Many people interested in investing in penny stock market will resort to many ways to make their investment successful. While this trading market is a highly risky one, you would know that there are some methods that can help you through this. One way is to subscribe to penny stock newsletters known also as penny stock promoters to have the chance to find the right investment in this type of trading.
Maybe you have reached this method as a result of your strenuous research in this field or maybe you have been recommended to do so, either way, there are some things that we would want to draw your attention to before relying too much on these promoters.
First of all you must know that these newsletters (at least 99% of them) are not issued to serve your own interest and here are some other things that you should be aware of:
- Promoters act most of the times on behalf of the companies they advertise for, being paid with free shares and cash. When a penny stock gets high in price, these promoters will dump their shares not minding how low the price per stock might go. If you have happened to buy these stocks, you will find yourself in a big trouble losing all the money you have invested in this trading because companies will also tend to dump the shares into all the buying volume.
- What you can never see that obviously (because it is less visible) when dealing with these promoters, is the detail of compensation in the event of a disclaimer. Due to this fact, many people are tempted to get hold of the stock a little longer in the hope that the stock they have picked will boost back in price. But in their majority these stocks do not recover, and as a result many investors are forced to sell them with a loss of more than 90%.
There are as well some of these penny stocks that deserve holding them for longer time, but it is rather hard to identify them. You can try also through these penny stock promoters, but again it is hard to spot the reliable ones, especially that you know now of their intentions and that they act as paid promoters for various companies’ interest.
One piece of advice: if you are in doubt about a penny stock promotion, you should look for the less visible details in the disclaimer. This is merely one aspect that you should search for in the maze that defines the penny stock trading, but at least you will have a shade of doubt when being displayed with a penny stock promo next time. The newsletter is only for raising capital making use of the massive selling that will diminish the value of the specific stock.
If you are involved in penny stocks investment, you must have seen on various occasions, how a street riot occurred in some city across the globe affected the world stock market making it fell. Now the obvious question would be in what way a company which doesn’t have anything in common with that country can suffer from that a street riot or any other strike happened in the country?
To get an answer to this question you should first of all reach for the spreading factor of these sorts of riots. Well developed countries have always had a great fear for the phenomenon called ‘spreading’ when it comes to street riots and/or factories’ strikes.
When fear installs, then a state of uncertainty follows and this is exactly what markets around the world do not like. This is the moment that determines many investors to find cover under the all times alluring gold. In the meanwhile penny stocks might continue to trade well enough to bring those profits that small investors look forward to gaining. They are also performing well, especially when micro cap stocks are involved in gold market.
But you can have the surprise that one day, after markets have recovered, the price of gold to fall, although penny stocks can successfully mind their own way. The obvious conclusion from here is that smaller stocks can not be affected by riots regardless where these markets are located, across USA or UK. The uncertainty we talked about in the above mentioned paragraph comes more devastatingly for those companies which have their own stability and their share prices very well set.
If you take a closer look at the nature of penny stock you will see that they are in their definition quite uncertain. Therefore, when you plan to invest on this market you should always expect for the risk to be considered. More than this, the uncertainty status originates also in the start up of this specific company which comes with little cash, presenting no revenue whatsoever, probably backed up by a less experienced management team.
Investing in penny stocks is more likely done because of the volatility that comes with the investment itself. Once there is high risk perceived there can be as well high reward, therefore all those involved in this can be seen as those individuals who have a certain attraction to risk. But this is not all: it requires as well the instinct of speculation, the power to feel when there is the need to buy and sell.
Many believe that small cap stocks can be safer because of their risky nature. This feature will determine investors to be more carefully connected to the investment as opposed to the blue chips investments. Another aspect that brings us back to the topic of this article: penny stocks evolve in a geographically defined context. This means that if a penny stock company doesn’t have any business in France, then there is no way that street riots in France can affect the share value of that specific company.
