A penny stock investment can be labeled or described in several ways depending on the source. But in general, penny stocks are known as any common stock that can be traded below the price of $5 for each share. Exchanges of these stocks normally take place on NASDAQ or Pink Sheets.
Penny stocks online are defined by stockbrokers as a type of stock that trades under the price of $5, while regulatory agencies usually delineate them as any stock with less than $2 order price. Understanding the risks and learning about the factors in selecting a good quality penny stock with great potential for ROI or return on investment will help you lock in high yields.
Penny Stock Pointers
- You must write down ten to twenty lists of penny stocks that you deem to have the highest probability to generate income. This will permit you to monitor and manage your investment portfolio very well.
- When searching for penny stocks to watch, your stock trading plan should ensure that you come across with positive single day movers integrating higher than average volume. Search out for companies that are manufacturing and continuously developing new products, technology, or services that will surely entice consumers in the marketplace.
- Explore good charts to trade and look for companies that perform well. Study the stock price history as well as the strong stock chart patterns of companies that show potential high value or of increasing value. A penny stock investment that presents a history of odd trading activity and patterns most probably will not perform well in the stock market because of its volatile and unpredictable nature.
- When looking out for penny stock picks, you should realize that some available stocks to trade are housed in the OTCBB or Over the Counter Big Board and Pink Sheets. These types of stocks are new in the industry or rolling out new products in the market. When their prices increase and the company become established, their stocks will progress on one of the major stock exchanges. However, stocks listed on major markets are considered as shares that incorporate little potential for growth.
- When venturing in the penny stock market, it’s critical that you acquire your chosen company’s financial figures, data, and status, as an important component of your stock research. An enterprise with little amount of debt or no debt at all and demonstrates a pattern of increasing profit margins is a type of stock that you should not fail to list down on your top ten to twenty picks. You should as well determine the volume of the company stock and find out if their merchandise is patented. Note that a company with patented products will obstruct other companies from producing the same goods, thus impacting consumer demand and competition significantly.
- To avoid scams from ripping your money off, exercise extra diligence when reading emails from unknown sources offering the hottest penny stock picks or tips or messages claiming modern breakthrough in the medicine or technological field. The approach of these scam artists is to encourage novice investors to buy low-priced penny stock investment to boosts its stock prices. Later, they will budge around and sell the supposed hot stocks for revenues, leaving the beginners with financial losses. So, don’t forget to get yourself a proficient spam blocker.