Penny Stock Investing And Trading

In the financial market of U.S., penny stock are common stocks that have low per share price. The trading process of penny stocks includes share prices for less than $5. Penny stock stakes the provisional security of small companies regardless of market capitalization or its trading process such as it trades on over the counter listing service: Pink Sheets or OTCBB or on a securitized exchange like NASDAQ or NYSE.

Sometimes, the names small cap, micro cap, nano caps, refers penny stock. Market capitalization is out of consideration in determining the status of penny stock. It is the share price, which is the main key factor that determines the status of penny stock

Penny Stock-A Risky Investment:

The technical investors observe a great risk in going for penny stocks. Since many penny stock companies are fraud. The main motive of these companies is to sell shares and they are not inclined towards business development.

However, the truth is that, penny stocks are not the concept of those who do not want to take risk. It is for potential investors. Penny stock caters to a very risk business. Therefore, by following some tips, the investors can invest only money, which they can bear to lose.

Why to stake in Penny Stock:

No-doubt it is very risky, but it offers great opportunities for the investors to pile a lot of money. If the investors know their objectives then there is a possibility of winning some money in a short period. For the Penny stock enthusiasts, good investment advice and right tools help to survive and make a lot of money.

Discover a Perfect Penny Stock: The investors need to investigate to find a perfect penny stock before they buy in. There are numerous websites, which help the investor to list out the right penny stock.

Below mentioned features, help investors to acquire essential information about a company prior to investigating in them.

• Stock Structure: OS(Outstanding Stock and Float) and AS( Shares Authorized)

• SEC listing

• Transfer agent transparency

• Turn Over and Financial record

• Business Structure

• Valuation and Position of the Company

For instance, if the company maximizes the OS and closes to AS then it signifies no dilution in stocks. Following the transfer agent and insiders of the company is a good strategy to know about the company.

When to buy Penny Stocks:

After finding the right penny stock, the investors have to decide the entry point and execute the stocks in an appropriate way. Analyze the trading chart for a few days. It offers valuable information.

The message boards that analyze the chart and discuss penny stock trading help investor to plan for the execution of trade. Patience is the dominant tip to execute the penny stock trade. Buying stocks at the BID price is a nice option.

When to sell Penny Stocks:

It is very personal and depends on different investors. Investor needs to implement their strategy soon after the execution of buying order. Mostly, it is good to sell 50% of shares at around 25 % to 35 % PPS spike. Another 20% to 25 % rise in PPS then sell another
50 % of current stake and let the remaining as it is for a while.

Usually, the exit strategy needs to be flexible and vary with momentum, volume and news. If the investors sell, ASK, 90 % of time, it will not harm the run.