Minimal Risk Trading Penny Stocks

Penny stock trading is not for the faint of heart. A general rule is that you trade with money you can afford to put up…some traders recommend not trading more than $1500 in any one penny stock. Penny stocks can be very volatile, some move at more than 100% per day, based on news that may be released, such as a new product introduction or FDA approval etc….

I usually look for liquidity in my picks. Liquidity simple means enough shares change hands, during the trading day, to enable me to move in and out of the stock easily, if I chose to. The question begs “Can I make substantial profits trading penny stocks?” We can define penny stocks as shares that trade under $5. Most mutual funds will not accumulate shares in any company trading at these levels. There are many stock picking “services” out there that claim to have the next big pick. Be careful, as many of these services are paid, by the company, to build interest in the stock, quite possibly for selfish reasons. There are several legitimate resources out there that truly have no personal stake in the stocks they recommend, therefore their opinions are unbiased. There is usually a yearly membership fee charged. Generally, these days, you are looking for a stock with growing revenues, year over year, and a low debt load. The fewer shares outstanding, the better. Many small companies will constantly dilute the value of shares by issuing more to raise capital for ongoing operations.

You will find out that emotions run very high, in stock trading. For example, if an established, quality company misses their earnings forecast, many times investors dump the stock. You may pick up a nice bargains as the price share price trends lower and lower to where it is, quite possibly, oversold. On the other hand, you may find that a stock is over bought, when the company comes out with substantial news, or if they report a great quarter of operations. In this case, there is likely to be a sell-off, as investors take their profits.

Green technology companies tend to be in favor these days. Bio-tech had a big run, earlier in the year. Keep in mind, you can never do enough research. The ultimate system is listed below. Scientific formulas are used.

Trade along with me, as we follow the guidance of the Penny Stock Prophet as he add an additional 500 millionaires to his team. This, VERY likely, be the best financial decision you can make. http://pennystockwinner.info/

About the Author

Scott is a full-time freelance author who truly cares about the well being his customers. Through better health and enhanced wealth, his goal is to positively touch one life at a time. In his spare time he is an avid sports fan and participant. He is also a huge Labrador Retriever fan.

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