Investing in Penny Stocks

When you begin to look for penny stocks for an investment, there are many decisions to make. Penny stocks are very speculative, which means if you buy the wrong stock at the wrong time, you could lose a lot of money. That being said, there is a lot of money to be made trading speculative stocks. You must do your research, learn how to chart and trust your instincts and knowledge. There is no hoping. Doing this, you may be able to begin making a profit quickly on a relatively small investment.

Finding penny stock to invest in is very difficult. There are thousands of stocks to choose from, how can you find a good company in the right sector, how do you choose just one that will make you money shortly after you buy it. This is where the real work comes in. Using research, scanning tools, stock picking sites and screeners can help you find that one stock that stands out above the rest.

You could use the forums, message boards and bulletin boards to gain your information but you have to weed through a lot of scams and lies. If you wait patiently you may find traders who are really interested in doing research and finding great stocks. You may find good traders but be careful, they may just be using insider information.

There are many ways to do research, you must read all the companies filings, this is cumbersome at first but becomes easier once you know what your looking for.There are also newsletters, subscription services, and stock picking sites that will help you find stocks and ideas of which sectors to buy in. These sites also provide research on their reasoning usually. If you use these types of sites, ensure that they are not being paid by the company, there needs to be a disclaimer after the advice that lets you know if their research is paid for by the company, otherwise called a promotion (these are bad). As you watch and research the penny share market you will become better at finding stocks and making money.

On any given day enter your brokerage account and begin scanning stocks by price, volume and 52 week highs and lows. This will show you what traders are interested in. Don't just buy, you need to begin research on these companies that you find. Once you get a feel for these moving stocks try trading them, this will be more of a day trading type set up and you should exit your buys as soon as the stock begins to drop in price or slow down in volume.

Ensure you have the right brokerage account, one that charges a flat fee and has some of the tools I described above. Some brokerage accounts charge extra fees for penny stocks and any extra fees will come out of your profit making it harder for your account to be positive at the end of the day. Also you want your brokerage account to have a charting service where you can chart stocks on their movements.