We don’t all have access to spare money to start investing and trading in successful companies, trying to make our fortunes. For those of us who would like to get involved in stocks without the big initial outlay, Penny stocks can provide a solution.
It isn’t surprising that Penny stocks are low value stocks, typically traded for pennies per share. But don’t be deceived by name. In the past Penny Stocks needed to be under $1, however, now Penny Stocks can be anything up to $5. Which generally makes them more affordable, if traded well! If you’re wanting to try and improve your trading game to make more profit, then it could be beneficial to research more into something similar to this motley fool stock advisor review or other reviews into the various trading advisor applications or platforms available today.
1. Know the Market
Penny stocks are not traded on the major markets such as the New York Stock Exchange. Instead they are traded on the Over the Counter (OTC) markets. They can also be listed on publications like the Pink Sheets which don’t require much financial information to be given, making investment more of a gamble. It is important to understand how they work and get to know the market before using any of your hard-earned cash to buy up some stocks.
2. Number of Outstanding Shares
People often look at the share price and overlook some of the other fundamental information before diving in. The number of outstanding shares can be a very good indicator of how well the company is doing. If the company regularly issues more shares in order to raise money for the business then any shares you have will decrease in value.
3. Read the Stock Charts
Getting to know the charts and understanding how to read them will stand you in good stead for spotting a winner among penny stocks. Combining fundamental analysis (details about the company such as management, lawsuits, revenues) with technical analysis (trading patterns) gives you the best chance of finding and investing in the next big thing. You could also be interested in a specific subset of penny stocks which is projected to grow rapidly in the coming years: the AI penny stocks. You might want to start by investing in artificial intelligence stocks under $10. Such AI stocks can offer significant upside potential. As AI technology continues to advance and be adopted across various sectors, the most innovative and well-executed AI companies could see their stock prices rise dramatically.
4. Use a Penny Stocks Scanner
Technology is designed to help us to do things easier and quicker. This is exactly the purpose of penny stocks scanners. Some scanners do not include OTC market and Pink Sheet Stocks so if you choose to go down this route, make sure you fully read what you will be getting out of any market scans. For many traders, scanners are found to be the best way of predicting what has a high probability of making money.
5. Don’t Be Fooled
Image via Flickr by StockPenny
Penny stocks are bought and sold for relatively small amounts of money and it can be easy to get caught up in thinking it’s a simple way to get involved in the stock market. However, the lower prices don’t actually reflect a simpler market and it is vital to do large amounts of research before parting with any cash. The penny stock market has much less liquidity than the major markets and so when you’ve bought stocks it can be difficult to get rid of them.
