Picking The Best Penny Stocks
It is logical that before you put your money into any investment, you would like to know if the stocks you are buying have a realistic possibility of increasing in value. It’s natural to want to find the best stock to buy. It is known that there are thousands of penny stocks that exist in the market. It is imperative that before you purchase any of these stocks; you know how to identify the top stocks from over hyped ones.
Picking the best penny stocks isn’t as easy as it looks
This is not an easy task, as being able to do that would require a great deal of research and a few actual trading experiences. Finding the best penny stocks needs some bullet proof strategies. Here are some of them.
Look at their charts
One good method of checking whether a penny stock company is worth investing into is to check its trading charts. Observe it for detectable trading patterns. Once you notice that a stock has a habitual record of increasing in price shortly before the release of a quarterly report, then it would be good to time your purchase with the next projected price increase and sell it before the subsequent earnings report is issued.
Being able to read and understand a stock’s chart is the simplest way to verify if the stock should belong to your list of the best penny stocks.
Find companies with trustworthy and dedicated management
Unfortunately, the market is filled with deceitful companies that are being managed by dishonest stock promoters whose only aim is to publish and hype their stocks and gain big profit. Most of the time, they can effortlessly manipulate their stock price.
However, because there is no actual company that would be accountable to the claims, the amplification of the price rarely lasts more than a single trading session.
Check for diamond in the rough stocks in a booming industry
Good stocks can be found in industries that are currently experiencing a significant demand for their products or services. A company that offers service with original features that are not offered by any of its competitors has a high possibility of being discovered. Once known, it is expected their stock price will dramatically increase. Just like all blue chip stocks, the good penny stocks do not rely on hype.
Thesecompanies rely on their continued performance and their good products. If you own a penny stock that abruptly starts going up because of a press release, play it safe, take your profits and pull out.
Credible price increases will happen when a company has really good products or services, or fulfill a need, and not because of some press release.
You must try and time the market
Timing the market can be of the utmost important. Stocks are constantly moving, and investors need to identify when the stock may move up or down and analyze the stock chart of each stock being analyzed. Investors should stay up to date by reading a variety of books on the stock market and reading business news as well as global news.
Even if you have formulated a system for finding the best penny stocks, it won’t be fool-proof. Although it might increase your chances of trading successfully, always keep in mind that the penny stock market will always be a gamble. Do not invest your money if you cannot afford to lose it.
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