Microcaps – Day Trading Micro cap Stocks

Did you ever yearn to be like the big dogs trading stocks and making millions? Well, you’ll never know if you can do it if you don’t try. But, if you have only a little bit of money to trade with you won’t get far un less you trade microcaps. You’ll need very little money to trade them.

Today there are tons of books and courses that give you an excellent education on trading stocks. In today’s market you can trade options, microcap/penny stocks and forex and you don’t need a ton of money to get started.

There are demo accounts where you can paper trade without spending any money at all while you take your time learning the techniques and strategies that will help make you a good trader.
You can open an account with a little bit of money and start trading right away.

But a smart trader researches stocks every day. Markets change, companies change and you need to know how to trade through the changes.

To do proper research like the big dogs, you will need to learn how to read a stock chart, learn to read company financial statements, candlesticks, moving averages, fibonacci numbers…there so much to learn. But the good news is anyone can learn and you don’t need to know everything right away to start trading. Especially if you can get a good mentor someone who has had years of experience and can help you cut the learning curve.

The important thing is to learn the basics, do some paper trading, decide what your risk is and make a plan on how to use good money management skills to lower your risk.

Most people jump into trading as if there playing the lottery. You have to approach this like a business. Make a plan and stick with it. By using a limit order to enter and setting stops to limit your losses and not operating out of greed or fear you can be on your way to making your millions by trading the stock market.

A good reputable stock picking newsletter service can help you by doing the research for you and then explaining why he or she picked a certain stock to trade. The service can tell you when and why to buy and when and why to sell. They can clear up all the confusion and help you to learn how to trade on your own eventually.

Consider the most common highly leveraged trading vehicles that are in the financial market place today.

Stock Options – Buying Calls

When buying Call Options, you have to do your homework and figure out what stock you want to focus on? The advantage of buying call options versus buying the stock is the ability to leverage your investment. You can gain a much larger return on your investment by controlling a larger number of shares with a purchase of call options rather than paying the full stock price.

Remember, we only have 1,000 to risk and because more option shares can be purchased than stock shares for a set amount of money a slight movement in the stock will generate greater returns on your investment. For those not too familiar with trading options, remember, options are available in specific months at specific strike prices and the contracts expire at the market close of the third Friday of each month. Call premiums are based on the potential upward or downward fluctuations in the stock price.

Now, you have to ask yourself, how far do I go out? Do I go out one, three, six, or nine months? If you have a long-term outlook on the stock, in some cases you can even consider going out as far as 3 years and buy what are referred to as Leaps.

Let’s briefly go over a couple of terms that describe the Option Strike Price in relation to the stock price. If you are going to buy Call Options it’s best to familiarize yourself with the terms: In-The-Money, At-The-Money and Out-Of-The-Money.

In-The-Money refers to an option strike price that is lower than the current stock price. At-The-Money refers to an option strike price and a stock price that are the same. And finally, Out-Of-The-Money is a call option position that is riskier than the previously mentioned, but some find them tempting because they are the lowest priced options compared to at-the-money or in-the-money call options. As tempting as At-The-Money and Out-Of-The-Money Call Options may seem, The Stock Wizards advises anyone buying Call Options to always try and buy In-The-Money Call Options. The reason for this is simple, if the stock price goes against you, as we get closer to expiration, there is a better chance of recovering at least some of the option premium. On the other hand, if the stock price moves up with speed, you will capitalize with a much greater premium and return on your money. This has to do with intrinsic value, which we will talk about shortly. In-The-Money Call Options may cost more because the premiums are bigger, but it’s worth it in the long run.

Let’s talk about the drawbacks of buying Call Options. The biggest drawback to buying a Call Option is if the trade goes against you. Example, if Google is trading at $500, and you are expecting the stock price to go to 550 in the next 30 days, and within those 30 days the stock actually drops to $450 a share. Guess what happens? You lose your entire $1,000. Why? Time decay, otherwise known as intrinsic value. Time decay is the biggest factor when trading Call Options. While the stock price is moving in an upward direction, the call option premium may also be moving in an profitable direction. However, this depends on the combination of time value. The call option is a derivative of the stock; therefore, the premium price is much smaller than the stock price. Hence, the upward movement of the option premium provides a greater percentage return than the increased profit potential of buying the stock. If the stock price does not move upward with speed within the specific contract period, you could easily lose your entire investment. There are many other options strategies available, and some as very useful tools when trading stocks, but since we have limited funds in this example, buying Call Options will give us the most leverage.

Remember, a Call Option buyer will generate profits if the stock rises in price. But, it helps to buy in the money Call Options like our example above. However, if you purchase the incorrect call option for a particular stock at an inappropriate time and the stock price falls, you can go from a significant profit to being in a losing position that may be difficult to recover from. Timing is everything and selecting the right call option at the right time is critical. There is bigger risk and reward than purchasing stocks and holding them. Again, if your stock price moves up with speed, you can make a significant profit with little capital.

Futures Contracts

You can also take your $1,000 and trade Futures Contracts. You can trade Currencies (Forex), and Equity Index Futures Contracts. The most popular Index Futures Contracts are the S&P minis. Let’s start with the S&P mini futures. With a $1000 there are some brokerage firms that will allow you to trade up to 1 contract on $300-$500 margin. If you want to hold your position (1 contract) overnight it will cost you $5,000 to hold. For a day trader that only has a $1,000 to trade with, the S&P mini may not be a good choice because you can lose that in a matter of minutes. The draw downs on a $1,000 account are basically too difficult to manage and becomes a losing proposition.

Forex Trading

Forex Trading. Very similar to the S&P minis. You’re buying contracts on Currencies. The only advantage of buying a currency contract that is a little more attractive than trading the S&P mini’s is that you don’t get penalized on your position if you hold it overnight. If you buy 1 currency contract and you put up $500 on margin, your margin requirements do not change and do not go up if you hold your position over night. Just like the S&P mini futures you can lose your entire investment in a matter of minutes. Most people that start off trading S&P Minis and Forex trading blow out their accounts pretty fast. The leverage and volatility is a killer for traders that have small accounts when they start. There’s not enough breathing room for draw downs if your trade goes against you.

Penny Stocks

Penny stocks usually trade on the OTCBB and Pink Sheet exchanges. These stocks typically trade anywhere from .0001-5.00. Just like Options and Futures, penny stocks give you powerful leverage on your money. What fascinates Traders and Investors about playing the pennies is that you can take a $1,000 investment and turn it into hundreds of thousands of dollars in a short period of time. However, it’s not uncommon for traders to own millions of shares of a penny stock company at any given time. Example, with a $1,000 dollar investment, a company with a stock price of .0001 buys you 10 million shares. That’s right, 10 million shares. Take that $1,000 and buy a stock trading at .01, and you can buy 100,000 shares. Imagine how much it would cost you to buy 100,000 shares of Google (GOOG) at its current price of 570 per share? The power of leverage in penny stocks is incredible to say the least.

TheStockWizards.net has found some recent examples of how you can leverage a small amount of cash and make a lot of money in a short period of time. All it takes is one big hit on a penny stock, and trust me, you will be hooked forever. With the right training and proper education you can become a very successful penny stock trader. Let’s take that measly $1,000 and invest in some penny stocks.

In 2009 the biotechnology sector was the hottest sector in the penny stock arena. Here are some of the hottest penny stocks that made some of the biggest returns that year.

In this first example the stock symbol BIEL was a Sub Penny Stock Trading below .003 when it made its big run.

Consider the most common highly leveraged trading vehicles that are in the financial market place today.

Stock Options – Buying Calls

When buying Call Options, you have to do your homework and figure out what stock you want to focus on? The advantage of buying call options versus buying the stock is the ability to leverage your investment. You can gain a much larger return on your investment by controlling a larger number of shares with a purchase of call options rather than paying the full stock price.

Remember, we only have 1,000 to risk and because more option shares can be purchased than stock shares for a set amount of money a slight movement in the stock will generate greater returns on your investment. For those not too familiar with trading options, remember, options are available in specific months at specific strike prices and the contracts expire at the market close of the third Friday of each month. Call premiums are based on the potential upward or downward fluctuations in the stock price.

Now, you have to ask yourself, how far do I go out? Do I go out one, three, six, or nine months? If you have a long-term outlook on the stock, in some cases you can even consider going out as far as 3 years and buy what are referred to as Leaps.

Let’s briefly go over a couple of terms that describe the Option Strike Price in relation to the stock price. If you are going to buy Call Options it’s best to familiarize yourself with the terms: In-The-Money, At-The-Money and Out-Of-The-Money.

In-The-Money refers to an option strike price that is lower than the current stock price. At-The-Money refers to an option strike price and a stock price that are the same. And finally, Out-Of-The-Money is a call option position that is riskier than the previously mentioned, but some find them tempting because they are the lowest priced options compared to at-the-money or in-the-money call options. As tempting as At-The-Money and Out-Of-The-Money Call Options may seem, The Stock Wizards advises anyone buying Call Options to always try and buy In-The-Money Call Options. The reason for this is simple, if the stock price goes against you, as we get closer to expiration, there is a better chance of recovering at least some of the option premium. On the other hand, if the stock price moves up with speed, you will capitalize with a much greater premium and return on your money. This has to do with intrinsic value, which we will talk about shortly. In-The-Money Call Options may cost more because the premiums are bigger, but it’s worth it in the long run.

Let’s talk about the drawbacks of buying Call Options. The biggest drawback to buying a Call Option is if the trade goes against you. Example, if Google is trading at $500, and you are expecting the stock price to go to 550 in the next 30 days, and within those 30 days the stock actually drops to $450 a share. Guess what happens? You lose your entire $1,000. Why? Time decay, otherwise known as intrinsic value. Time decay is the biggest factor when trading Call Options. While the stock price is moving in an upward direction, the call option premium may also be moving in an profitable direction. However, this depends on the combination of time value. The call option is a derivative of the stock; therefore, the premium price is much smaller than the stock price. Hence, the upward movement of the option premium provides a greater percentage return than the increased profit potential of buying the stock. If the stock price does not move upward with speed within the specific contract period, you could easily lose your entire investment. There are many other options strategies available, and some as very useful tools when trading stocks, but since we have limited funds in this example, buying Call Options will give us the most leverage.

Remember, a Call Option buyer will generate profits if the stock rises in price. But, it helps to buy in the money Call Options like our example above. However, if you purchase the incorrect call option for a particular stock at an inappropriate time and the stock price falls, you can go from a significant profit to being in a losing position that may be difficult to recover from. Timing is everything and selecting the right call option at the right time is critical. There is bigger risk and reward than purchasing stocks and holding them. Again, if your stock price moves up with speed, you can make a significant profit with little capital.

Futures Contracts

You can also take your $1,000 and trade Futures Contracts. You can trade Currencies (Forex), and Equity Index Futures Contracts. The most popular Index Futures Contracts are the S&P minis. Let’s start with the S&P mini futures. With a $1000 there are some brokerage firms that will allow you to trade up to 1 contract on $300-$500 margin. If you want to hold your position (1 contract) overnight it will cost you $5,000 to hold. For a day trader that only has a $1,000 to trade with, the S&P mini may not be a good choice because you can lose that in a matter of minutes. The draw downs on a $1,000 account are basically too difficult to manage and becomes a losing proposition.

Forex Trading

Forex Trading. Very similar to the S&P minis. You’re buying contracts on Currencies. The only advantage of buying a currency contract that is a little more attractive than trading the S&P mini’s is that you don’t get penalized on your position if you hold it overnight. If you buy 1 currency contract and you put up $500 on margin, your margin requirements do not change and do not go up if you hold your position over night. Just like the S&P mini futures you can lose your entire investment in a matter of minutes. Most people that start off trading S&P Minis and Forex trading blow out their accounts pretty fast. The leverage and volatility is a killer for traders that have small accounts when they start. There’s not enough breathing room for draw downs if your trade goes against you.

Penny Stocks

Penny stocks usually trade on the OTCBB and Pink Sheet exchanges. These stocks typically trade anywhere from .0001-5.00. Just like Options and Futures, penny stocks give you powerful leverage on your money. What fascinates Traders and Investors about playing the pennies is that you can take a $1,000 investment and turn it into hundreds of thousands of dollars in a short period of time. However, it’s not uncommon for traders to own millions of shares of a penny stock company at any given time. Example, with a $1,000 dollar investment, a company with a stock price of .0001 buys you 10 million shares. That’s right, 10 million shares. Take that $1,000 and buy a stock trading at .01, and you can buy 100,000 shares. Imagine how much it would cost you to buy 100,000 shares of Google (GOOG) at its current price of 570 per share? The power of leverage in penny stocks is incredible to say the least.

TheStockWizards.net has found some recent examples of how you can leverage a small amount of cash and make a lot of money in a short period of time. All it takes is one big hit on a penny stock, and trust me, you will be hooked forever. With the right training and proper education you can become a very successful penny stock trader. Let’s take that measly $1,000 and invest in some penny stocks.

In 2009 the biotechnology sector was the hottest sector in the penny stock arena. Here are some of the hottest penny stocks that made some of the biggest returns that year.

In this first example the stock symbol BIEL was a Sub Penny Stock Trading below .003 when it made its big run.

In this second example this was another sub penny stock that started below .003 and made it all the way up to a $1.00 in a very short time.

This has to be one of the biggest moves of all time in the Penny Stock arena. This was a stock that was in bankruptcy before it made its move. At the very bottom, news came out on the company that had gotten FDA approval. On September 11th VRML announces the following: “U.S. Food and Drug Administration Clears Vermillion’s OVA1(TM) Test to Determine Likelihood of Ovarian Cancer in Women with Pelv.”

Timing

When starting off with a small amount of cash like $1,000, it is critical that you get into a stock that is at the beginning of the move, or is at least in a consolidation phase (moving sideways) before you buy. Do not chase.

In Closing

As you can see, the power of leverage in penny stocks is just incredible! Do not let anybody discourage you. Many believe that penny stocks are scams. Many criticize small cap stocks and believe you should stick with large caps like IBM and GOOG. Not always the case. Although large caps present a good long term opportunity, not everyone can afford to buy them. Big board stocks can be very expensive and are not always risk free either. Remember what happened to Enron, WorldCom, and more recently Bear Stearns? It’s true that there is risk in the stock market, and usually the more risk, the more reward, but if you do your own due diligence and apply some of the trading techniques we’ve discussed, you can become a successful penny stock trader even on a part-time basis. And lastly, you can also lose your entire investment in a penny stock if you don’t time your investment right and get out in a timely manner if something goes wrong. But the risk to reward ratio is incredible. Remember penny Stocks are trading vehicles not investment vehicles.

TheStockWizards.net has over 30 years combined experience when it comes to trading penny stocks. With the information that we provide, you too can be a successful penny stock trader.

TheStockWizards.net is not recommending any stocks mentioned in this article and advises everyone to do their own due diligence and understand the risks associated with day trading. Please be aware that you can lose your entire investment trading penny stocks, options, futures, and S&P minis.

Forward-Looking Statement: This press release includes “forward-looking statements”within the meaning of the federal securities laws, commonly identified by such termsas “believes,” “looking ahead,” “anticipates,” “estimates” and other terms with similarmeaning. Although the Company believes that the assumptions upon which itsforward-looking statements are based are reasonable, it can give no assurance thatthese assumptions will prove to be correct. Important factors that could cause actualresults to differ materially from the Company’s projections and expectations aredisclosed in the Company’s filings with the Securities and Exchange Commission.All forward-looking statements in this press release are expressly qualified by suchcautionary statements and by reference to the underlying assumptions.TheStockWizards.net is not a registered investment advisers or broker/dealer. TheStockWizards.net makes no recommendation that the purchase of securitiesof companies profiled in this website is suitable or advisable for any person or thatan investment in such securities will be profitable. In general, given the nature of thecompanies profiled and the lack of an active trading market their securities, investingin such securities is highly speculative and carries a high degree of risk.

Discloser, Disclaimers:http://thestockwizards.net/about/disclaimer

How To Buy Pink Sheet Stocks – 3 Informative Steps

Before you buy Pink Sheet stocks, you first must know, that Pink Sheet Stocks (Penny Stocks) are not required to meet listing stan dards like the stocks listed on NASDAQ or the New York Stock Exchange. Pink Sheet stocks are traded over the counter (OTC) via an electronic quotation system. Earlier, these stocks were released in pink slips or sheets. Hence, the odd name, Pink Sheet Stocks. Later, these listings were called penny stocks.

FIRST STEP: Open an account with a brokerage firm.

Investors cannot buy or sell stocks through the OTC Markets. With a brokerage account you can trade Pink Sheet stocks, as well as stocks listed on NASDAQ, and the New York Stock Exchange. There are three types of brokers: a full service broker, a discount broker, and an on-line broker. Full-service brokers can be very expensive; however they can offer advice on which stocks to buy. Discount brokers charge less per transaction but offer less advice. And online brokers offer the cheapest way to trade your stocks. But, the investor does the research (This is the method I have chosen).

Before you choose a firm, make sure they will accept Pink Sheet stocks orders. Not all brokers do! Below is a list of some brokerages that trade Pink Sheets stocks:

Ameritrade

E*Trade Financial

Fidelity

Scottrade

STEP TWO: Learn how to use limit order vs. market order

Simply stated, a limit order is an order to buy or sell a stock at a certain price. When using market orders, you have no control over the price at which your stock will be purchased. Since the market price for your stock could go up or down substantially before your order goes through, a market order may cost you more money for the stock than you wanted to pay. Or, you might sell at a lower price then you wanted.

STEP THREE: Always research your proposed investment.

It’s very important that you make your decisions to buy Pink Sheet stocks based on thorough research of the company’s annual report and financial statements. Be persistent, because good information is hard to find for many of these companies. Be careful when you make a decision to invest in a Pink Sheet stocks, there has been and will continue to be lots of fraud in this area of investing. Do your research!

I personally use a penny stock newsletter to get my stock picks. You might want to look into using one as well. You can click here for more information. They really help in taking the risk out of investing, especially for people who do not have the experience or time needed.

Jim Cramer Bullish on Solar Sector Bullish Solar Penny Stocks Opening Bell SNRY, UDHC, VKNG, ICOA, BFHJ

SNRY Leads Hot Penny Stock Alerts

Oct 07, 2010 Boca Raton, FL-TheStockwizards.net a free hot penny stocks alert blog newsletter gives you up to the minute real-time detailed financial information with quotes and chart updates on the OTC-OTCBB, NYSE, and NASDAQ. TSW is looking for hot penny stocks exposed such as snry on the move showing unusual movement that could end up being a popular top performing HOT OTC small cap penny stock.

We know traders and investors are looking for exciting hot penny stock alerts like snry along with OTC volume movers to put on there speculative watch list for review.

The TSW penny stock finder trading system locates the best small cap, micro cap penny stocks such as wmns that have unusual movements with news, popular small cap penny stocks with big gains, and strong stock trends.

TSW looks for exciting, explosive penny stocks like snry with the right mixture of powerful volume and low market capitalization to give day-traders & investors an opportunity to build a penny stock trading watch list consisting of the most notable penny stocks like snry that have high volume with positive change that can become explosive mega volume penny picks at any given time.

The hot penny stock alerts included in this report are: SNRY, UDHC, VKNG, ICOA, BFHJ

Solar Energy Initiatives (SNRY) OTCBB $0.153 up 23% on volume of 1.7 million shares traded in the early session.

Ulysses Divsd Hldg Corp (UDHC) OTC $0.0187 up 20% on very active volume of 2.8 million shares traded in the early in the session.

Viking Sys (VKNG) OTCBB $0.451 up 8% on volume of 435,957 shares traded.

Icoa Inc Common Stock (ICOA) OTC $0.0008 up 33% on more than average volume of 155 million shares.

BENEFICIAL HOLDINGS INC (BFHJ) OTC $0.0051 up 6% on breakout volume of 24.3 million shares.

For more information on how to get ahead as a Penny Stocks Trader in stocks like SNRY, go to Traders Corner.

Get Real Time Text Message Trade Alerts Like SNRY Sent to Your Cell Phone.

Penny Stocks Forward-Looking Statement: This press release includes “forward-looking statements” within the meaning of the federal securities laws, commonly identified by such terms as “believes,” “looking ahead,” “anticipates,” “estimates” and other terms with similar meaning. Although the Company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from the Company’s projections and expectations are disclosed in the Company’s filings with the Securities and Exchange Commission. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions.

Hot Penny Stock alerts snry

Rising Volume in Penny Stocks

Rising volume when prices are falling can come in two flavors. There are volume spikes which typically indicate a short term bottom as those hoping for higher prices bail; and then there are the gradual build up in volume type moves accompanied by gradual but continuing declines in price. These are the sickening moves that happen from time to time where you have a blow off type volume move over a period of days that results in very low prices relative to the general price level and is usually accompanied by a V shaped volume and price spike back in the other direction. The problem is having the patience and the nerve to stick your neck out in such a decline. You have to gradually average in to such a move as the odds of catching the bottom tick are almost nil. You will find these types of plays all over the place during a bear market.

In a bear market, there are stocks that still rise. However, in a bear market, there are times when even the good stocks are pulled down and you find declining prices on average or falling volume. Falling or average volume when prices are falling is usually a sign of strength, not weakness; especially if the stock has generally been in an uptrend prior to the short term down trend.
When a stock exhibits steady volume when prices are steady, then this doesn’t really give us anything to go on. It doesn’t give us any insight into where prices will necessarily go based on a volume read, but the fact that the price range is narrowing suggests that something will occur soon enough. It is then that we will get both a volume and a price read to determine the sustainability of the next move.

There is a close relationship between price and volume. Although indicators have been built on various volume measures, all indicators have a couple of inherent problems and we continue to feel that it is important to view price and volume as a relationship that says different things about a stock when the general trend is up versus down, versus sideways. In general, rising prices should be accompanied by rising volume for the market and/or stock to be healthy.

Similarly, falling prices should be punctuated with volume spikes and to a lesser degree, rising or steady volume shows a healthy continuation to the downside. Falling volume that is associated with rising prices generally is a red flag warning you to be careful as a healthy correction could be just around the bend.

Average volume on rising prices generally occurs when a stock is turning from down to up or sideways to up or sideways to down. Generally a stock that moves from up to down has large prices drops that is accompanied by large spikes in volume.

If you intend to trade stock, you should only ignore volume at your own peril. It can give you the comfort to stay with a position when times are tough, or to signal that you need to lighten up or get out of a position when things seem fine. Volume recognition is your friend just as is the trend.

Article Written by wallman Hot Penny Stocks

If you’re considering day trading microcap/penny stocks online and have only a little bit of money to trade then microcap/penny stocks are perfect because they are low in price. The stock doesn’t have to move much for you to make money.

It’s common sense that an increase of five cents to ten cents is much easier to achieve with penny stocks than an increase of one hundred to two hundred dollars with blue chip stocks. The attractive thing about penny stocks is that it is possible to purchase small and trade for just a little bit of money to realize a profit.

Day trading penny stocks is a lot riskier than trading blue chips but the reward is substantially higher. To be successful though you need to be good at researching the companies because for the most part these companies are unregulated and it takes a ton of digging to get to the truth. You can use a broker who knows the market well or subscribe to a newsletter service that has a track record of making its subscribers money.
A reputable newsletter will provide a lot of insight into penny stock investing. As a trader you should pay attention to whatever stocks the newsletter service offers. Don’t trade them blindly. Pay attention to what is happening within the company whose stock you will trade. Are there any warning signs such as layoffs, store closings, financial shenanigans? In other words, is the company showing any signs of trouble? Use all the tools you have in your arsenal, such as, technical analysis, fundamentals and stock charts. A good newsletter service will provide you with that information right to your e-mail. Before you subscribe though make sure you know exactly how they are picking their penny stocks. You want to avoid the pump and dump shops.

Also, do some research and learn how to excel at penny stock day trading yourself. You will find some sites that offer memberships and these services can offer benefits such as helpful tips and low-risk strategies, hot picks, recommendations and stock analysis. Getting this information will go a long way to make your online trading successful. Education is your strongest ally.

Don’t get “stars” in your eyes – only trade what you can afford to trade. Using what you can afford to lose has a very big benefit – it takes the fear and stress out of trading. If you are calm and calculating in your trading you will find that you have more winners than losers at the end of the day.

Of course if you want slow growth and security you might consider bonds or certificates of deposit, but the returns will be slow and not as dramatic as when day trading penny stocks online.

3 Successful Online Penny Stock Trading Rules

No one can logically debate that penny stocks aren’t a source of great profit. Over the course of time many people, including myself, have made money trading penny stocks. And so can you. However, it’s first important to lay a proper foundation for the future. For starters, here are three successful online penny stock trading rules.

Rule 1: Staying Safe

The investing field has its fair share of fraud. Typically, the “pump n dump” scheme is seen in the penny stock arena. However, it’s possible to avoid becoming a victim 100%.

Your first rule is to ignore information that comes from unsolicited emails. This is one of the prime communication sources for these scam artists. The other thing you can do is qualify “hot penny stock picks” that you see in penny stock forums. Don’t just trade a stock because some unknown person says it’s going to hit tomorrow.

Always do research. Even top pros will tell you to research their stock picks. It’s just common sense.

Rule 2: Online Stock Broker

I’ll just assume you’ll be using an online penny stock broker. It is vital that you do your research and open an account with a well-known, reputable broker. Don’t sacrifice pennies on fees for capital security.

We’re talking about your money here. While low fees are great, knowing your money is safe and accessible at all times is better.

Rule 3: Penny Stock Software

While there might be software out there for penny stocks, typically the tools you have at your disposal from your broker and free online tools, like Google & Yahoo, will be enough.

If you’re looking for penny stock picks for inspiration or hints on where to look for your next great trade, think about subscribing to a newsletter. Remember, always research everything.

If you’re interested, I have four other success rules to share with you. Remember, trading penny stocks online is potentially very profitable, it’s also risky (like anything else). Take the right steps, make the right moves and trade with knowledge and you’ll be set.

Penny Sleuth’s 10 Tips for New Penny Stock Investors

Many people who have never played the stock market game before start with penny stocks. Heck, even if you’ve been around investing for decades, penny stocks are still your ticket to triple, quadruple or even quintuple-digit gains. You just can’t see those if you bet on the Dow.

The problem is penny stocks are a bit more difficult to research than their large blue chip cousins. To make this a bit simpler for first-time investors, here are 10 things to keep in mind when looking for solid penny stock plays:

1. Think Outside the Box

When it comes to penny stocks, some of the wackiest ideas have translated into serious gains for investors who were willing to think outside the boxa

Back in the day, who would’ve thought that computers were the “wave of the future”? Early investors in companies like Microsoft and Yahoo, that’s who! They made a bundle by thinking outside the box and betting on business models and technologies that were out of the ordinary.

There are new technologies and business models out there in the penny stock world today. Are you willing to think outside the box on your next penny investment?

2. Know What You Own

In the world of Wall Street, whether you’re investing in penny stocks or blue chips, one of the biggest rules is to “know what you own.” What does that mean?

You should know the company you’re investing in inside and out. Know its business. Know how it makes money. Know its management.

But as important as this rule is for any investor, it’s doubly important for investors in penny stocks! That’s because with penny stocks, share prices can change quickly if you don’t keep a handle on them.

So know what you own and your investments won’t end up owning you.

3. Don’t Get in Over Your Head

When you see a hot penny stock that’s ready to take off, it can be hard to keep from cashing out your 401(k) to buy as many shares as you canagetting in over your head with penny stocks is an almost sure way to get burned.

Even though penny stocks can make you some serious money, they’re volatile – and that means you shouldn’t put more than 10% of your portfolio on the line.

What’s the smart penny investor to do? Set up an account for just penny stocks and load it only with money you’re prepared to lose.

4. Don’t Be Afraid to Aska

One of the beauties of penny stocks is the fact that they’re smaller companies that are out there for smaller investors.

As an individual investor, a big multinational might not give you the time of day. That’s usually not the case with penny stocks. In fact, it’s not unheard-of for individual investors to pick up the phone and chat with a company’s CEO or CFO on the spot.
If you’ve got a burning question about a penny stock prospect, e-mailing or calling the company’s investment relations firm or corporate offices might be one of the most telling ways to figure out if that stock’s for you.

5. Be a Skeptic

Remember when we said to think outside the box? Well, do that, but don’t forget to be a skeptica

Just because a company has an interesting new idea doesn’t necessarily mean it’s a good penny stock prospect for your portfolio. The key isaDo you think that it can monetize its idea?

If that answer isn’t immediately clear, it’s time to dig a little deeper into that company’s prospects. Thinking outside the box is a great way to get innovative companies on your radar, but being a skeptic is the only way to make sure that translates into gains for your portfolio.

6. Think, Then Buy

When you’re ready to buy shares of a penny stock, make sure you take a second to think about what you’re doing. All too many first-time penny investors take the jump on just a few shares of a penny stock without realizing how much the size of their investment will affect their returns.

Think about it this wayaYou’re an investor who sees an attractive stock for $1 per share. You don’t have a large portfolio yet, and you don’t want to take too much of a risk, so you buy just 50 shares for $50.

Turns out you picked a winner that made 40% in just a week – $20 of pure profit. You sell and rejoice in your penny stock success. But waitais that celebration justified?

You’re forgetting about those $10 execution fees you paid to buy and sell that stock. That’s $20 altogether. Looks like you only broke even, despite the fact that you had a stellar stock.

When you’re buying penny stocks, make sure you’re buying a large enough quantity that account costs (like execution fees) don’t eat up your profits. You can find out your minimum returns to break even with this:

Execution Fees/Stock Acquisition Price x 100 = Break-even Gain (Percent) Needed

7. Don’t Get Greedy

Lots of penny stock investors see 200%, 500%, even 1,000% gains on a stock but still end up losing money in the end. It’s not because they didn’t plan their buys properlyait’s because they got greedy!

It doesn’t matter how much money a stock makes if you’re not ready to press the button and realize those gains. That’s why you need to set solid exit points for any penny stock you buy.

It’s human nature to want to hold onto an investment as you see it climb with no end in sight, but doing that is a great way to miss out if that trend turns around. When you analyze an investment, think about a logical exit price and sell for that. Picking solid exit points will become easier as you develop your investing chops.

8. Don’t Get Too Nervous

The flip side of getting greedy is getting nervous with stocks that are seeing major gains in short periods of time. Relax. As a penny stock investor, you’ve got to be ice-cold when you see one of your picks take off.

Again, it comes down to picking good exit points for your investments. If you’re sure that your stock is bound to start losing ground before you hit that target price, maybe it’s time to re-evaluate what that price should be.

Remember, you can reanalyze your targets anytime, but you should never make trades on emotion alone.

9. Be Realistic

While investors might hope for tripe-digit gains on every pick they make, even the most seasoned pros of the investing world make bad picks from time to time. That’s why having realistic expectations is so critical.

As with picking the right target prices, knowing what kind of gains to expect comes with experience as a penny investor. It’s tricky to know when you should expect 20% from a stock and when you should expect 200%.

But setting those realistic expectations now, from the get-go, will get you into a habit that will help you structure your portfolio in a way that will get you the most bang for your investment buck.

10. Be Ready for the Next One

It’s easy to sit back and relax after you’ve just made a trade – especially if you banked a nice gain. But not so fast!

As much as you might want to bask in your investing success, fight that urge.

The secret to the penny stock game is to always be on the move. Always be on the lookout for that next penny powerhouse – the next one might just be your best yet.

Cheers,

Jonas Elmerraji

P.S. That’s a lot to look for. This kind of steady research and analysis can be very tedious. In fact, by the time you finish it, you may have already missed the boat. These penny stocks can shoot up in the blink of an eye. That’s why we send out the Penny Sleuth every business day. We don’t want readers to miss a thing. To get the insights we provide on the penny stock markets visit www.pennysleuth.com

For many people, making a great income with penny stocks is only a dream. This is a possible dream and I can tell you that it’s very doable. All you need is to learn “how to make good penny stocks picks”. www.pennystocksforprofit.com is a great resource for beginners and stock market veterans alike.

It is possible to make penny stock trading a primary so urce of income. I’ve done it, although it took a couple years. Now, I’m helping folks like you. With the right penny stocks picks, you can day trade yourself to a real income.

One thing to keep an eye out for when making good penny stocks picks is what is referred to as an ‘undervalued company’. There are many undervalued companies rising and falling in the stock market every day and catching one while the stock price bottoms out is a great investment.

Find a company that has big deals pending, like a buyout or a merger. In other words, keep an eye for a company that is doing a deal with a very large company.
Simply watching the news can be a good resource.

Those stocks tend to jump at least for a day or two and give you the opportunity to cash in on a short term investment.

Finding an undervalued company is a great way to find a good penny stocks pick.

Another, slightly more risky, technique to find a good penny stocks pick is to find an organization that is about to make a big announcement or press release. Most companies will give several days notice that they will be releasing an announcement about a possible merger or buyout by a larger corporation that is investing in the company to help them. This is a little more risky as the outcomes cannot be predicted with 100% accuracy, however, if you make a good judgement, it’s a good opportunity to really cash in on a short term investment. Hundreds of dollars can be made in a short amount of time if you make your choice wisely.

There is never an absolute rule about penny stocks pick however, if you do your research and use the right tools, you will do great!

That leads us to our next way to find good penny stocks picks…

Finding great penny stocks picks is really important to day traders and can lead to major profits very quickly when you make a good investment.

I have been day trading for nearly a year now and it is slowly becoming a primary source of income, which allows me time to write articles like this in my spare time to help others get the basics of penny stocks investments.

Cheers!

Penny stocks investment can be a good investment for those looking to invest in a low price stock with the best possible returns. But, before you plan to bu y any penny stocks, you should gather proper background information about the market history of the stocks that you are planning to buy. You should also analyze the company’s financial performance and also, the quality of the top management. Along with these vital details other useful information is needed like the firm’s future investment and business plan.

Purchasing penny stocks online is recommended in general. You should also develop an eye for promising firms that are on the verge of posting large profits. Firms that seem like rising stars are generally your best bet as they will trade in large volumes at first to build their capital.

Following are some tips on how to buy good penny stocks

Step 1: You should also do your homework when it comes to purchasing good penny stocks as there are a variety of stocks. If you make one wrong move, you can end up losing money. But, it is still quite possible to make a lot of money just by trading in penny stocks as you tend to have great leverage; also, you can have the choice to buy large quantities for a very nominal price.

Step 2: Most people make their fortune when there is a down market. This is also the time where you will find great opportunity to purchase some penny stocks that are on the verge of making large profits.

Step 3: Be careful while doing penny stock investment. Try to find those firms that are on the verge of posting huge profits.

Step 4: Trading in penny stocks can be a sure shot way for you to make profits but you should ensure that you check any firm before you invest to minimize the involved risks.

Step 5: Purchase a wide variety of penny stocks from different firms. It is also recommended not to put all your eggs in one basket. Buying different penny stocks is more like buying many lottery tickets. You would be increasing your chances of winning by investing in several penny stocks.