Welcome to our guide to buying penny stocks, where we will discuss and teach you basics about the best penny stocks and the best day trading software. You’ll learn about buying stocks online while avoiding the pitfalls prowling the penny stock market.
After innovative changes in legislation, the evolution of the World Wide Web and advances in stock trading technology, buying penny stocks online is now far more accessible for casual day traders. You no longer need to wear a starched dress shirt or fight your way through an expensive college. You can begin profiting through buying penny stocks right away from the comfort of your own home.
This phenomenon gives the financial power back to the individual. A single individual at home on his personal computer can now leverage day trading software to research and determine the best penny stocks online for him or her self.
We will focus our buying penny stocks guide on beginners and intermediate online penny stock traders. But many of the techniques and resources we will provide here might have you trading with savvy veterans in little time.
Buying Penny Stocks is Risky
Note that penny stock trading can be a risky business. When you start, I encourage you to begin by thinking in terms of limiting your risk rather than turning a quick profit. Your profit shall develop with practice and patience. But buying penny stocks requires discipline, consistency and above all else an emotional control. Do not act on a whim; rather, act with purpose while enacting an overall strategy.
Despite the label penny stock and the low barrier to entry, people specifically trade penny stocks online for the potential high returns. A penny stock is a stock that trades under $5.00 per share and has a market cap under $500M.
Savvy traders often trade on multiple returns with penny shares trading under $0.20 to fish for the best potential. For example, if you purchase at $0.15 (you’ll see this called the “entry point”) and sell at $0.60 (the “target”), you create the potential of making 4 times your return.
Think about it: obvious this sort of profit is far more likely with stocks in this low and volatile range.
The key to successful penny stock investing is to get in then get out ahead of the crowd given the general lack of liquidity of penny stocks.
Successful Stock Trading Requires Research and Work
Trading penny stocks to make money requires buying penny stocks online with promising outlooks. This means identifying companies which feature growing profits and sales, an assertive executive team, and a defined & explicit plan for expansion. Penny stock share growth is usually attributed to strong business fundamentals.
So how do you keep up with all this information? Well, despite what some people selling hope online might lead you to believe you need to do your research and you need to spend a little money up front to properly prepare yourself.
You need to perform three basic steps. If you REALLY want to succeed, I’ll add a bonus step.
- You must purchase and study some kind of reputable and authoritative book on day trading, preferably one that emphasizes penny stocks. Do NOT dive into penny stocks without studying beforehand and without a quality guide at your hand.
- You must join a penny stock newsletter. This requires paying some kind of subscription in most cases. Anyone who claims you can trade in penny stocks without a quality newsletter is lying through their teeth. As I stated earlier, you need to get in and out before the crowd in order to succeed with penny stocks. You also need to do a lot of research on companies before investing. A quality penny stock newsletter provides you with these advantages. In almost all cases, the best penny stock picks are saturated by members of professional newsletters before they hit the public radar.
- You need to perform your own due diligence. No matter how high quality or accurate the penny stock newsletter, you need to study stock trading on your own and you need to research and evaluate picks suggested by the newsletter. Quality newsletters provide a great foundation and greatly increase your likelihood of success, but nobody — I mean nobody — will pick winners 100 percent of the time. You need to increase your odds by doing your own research on top of the picks offered you by any given newsletter.
So what’s the bonus step? Am I about to sell you something? No.
But I do suggest you research some day trading software. This will automate many of the small steps you need to take when evaluating a penny stock online. You can at least quickly verify some specific data on the stock recommendation provided by your newsletter. Strong software can also help you do some of your own fast, deep evaluation.
So Which Penny Stock Newsletter?
So at this point you may be wondering… so what penny stock newsletter should I choose to give me the best penny stocks? What book should I buy to study penny stock buying before I dive into it? What day trading software should purchase and install to help me out?
All in due time. My site will provide a page reviewing each of these key areas of choices. I will certainly make my recommendations in each area, but I suggest you take my recommendations as part of your overall evaluation. It’s a good habit to develop when dealing with buying penny stocks.