Penny stock picks guide |
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To gain from the investments in Penny Stocks, which in itself is a very dicey investment option, you should be very careful about what to pick and what to avoid. Penny Stocks which boasts of converting small capital into big fortunes are primarily those publicly traded stocks that are presently trading under $5 per share. They attract both the traders as well as long term investors because of the small amount of capital required to make substantial gains. |
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They attract both the traders as well as long term investors because of the small amount of capital required to make substantial gains. Most of the Penny Stocks are traded on NASDAQ, Pink Sheets or
on the Over the Counter Bulletin boards. However, the Penny Stock
companies should not be considered inferior in any sense to those traded
on major exchanges. In fact, many of them have better growth rates than
some of the NYSE stocks and promise handsome returns on petty investments.
Yet, you need to do your homework and gain knowledge about these companies
to profit from them. Penny Stock picking sites and bulletin boards often
assist traders in finding emerging companies but getting influenced merely
by the impression created by these sites and getting entangled into the
hype generated by the phone salesmen or professional promoters hired by
some companies for this job specifically, can lead to disastrous
consequences. As a wise trader you should always avoid those penny stock
picking sites which use false advertising and misleading statements which
project unrealistic gains, such as, "this stock will go up
10000%" or "this is the greatest company ever". Some sites
even project a false history of their successful penny stock picks. Also,
ignore the sites and advertisements that use appealing words like
"guaranteed", "for a limited time", "we have
insider information", etc. Those Penny Stocks, which guarantee good
returns usually never, perform well. This kind of false propaganda can
also be witnessed in bulletin boards and chat rooms. More often than not
this hype is created by novice traders attempting to make their stocks
rise or by the paid representatives of the companies making misleading
statements in order to keep the price per share higher while the company
dilutes. Thus, it is recommended that you should personally collect all
the information about these stocks from reliable resources and should
invest in them only if you personally feel that they are a good
investment. Investing in tumbling Penny Stocks in the anticipation of
gaining later when these stocks will start performing well should also be
avoided, as many of them never recoil. Moreover, you should also ignore
those companies that engage in low volume trade and those which offer you
stocks without charging any commission. For the reason that it will be
very difficult for you to buy or sell those Penny Stocks which trade in
low volume, at desirable prices; and the commission free stocks are as a
matter of fact, never commission free, as these companies charge their
invisible commission either by selling you their stocks at an arbitrary
amount or at asking price rather than at bid price. Hence, you should apply your own diligence and not get
influenced by the false hype and propaganda, and pick those penny stocks,
which can really convert your pennies into big money By: Mansi Gupta
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