Penny stocks or also known as cent stocks in other countries are common shares that are traded at low prices per share. It can be defined as shares that are being traded under $1 per share, hence the name penny stocks.Normally penny stocks are thinly
traded and there’s not much activity going on and this can be subject
to manipulation by stock traders. These manipulators start off by buying large amounts of the stock,who then artificially inflate the share price through false and misleading positive statements causingother people to come in and buy the penny stocks.But fret not, there are also ways to safely trade penny stocks where with some knowledge, which putsyou in line to find the highest quality penny stocks, which penny stocks to avoid, how to trade risk free,
the best buying prices and when to take profits and make the exit. Most of us don’t have an exit plan
and pay the price for exiting too late.
The reason why penny stocks are risky is because of the company’s lack of information, history
record. Since it’s not heavily traded, you might find it hard to find a buyer unless you sell it at a lowerprice. Once you’ve done your research on which penny stocks are worth getting, you should open a
brokerage account which usually will include charts, historic prices and other additional info whichprovides more info for you as an individual trader to start trading penny stocks.Make sure the penny stocks are traded over a regular market exchange and not as over-the-counter
where it doesn’t
really require the same disclosure and regulation as larger stocks as to minimize your
risk. You shouldn’t believe all the hype surrounding a particular penny stocks which is normally based on
some insider trading. Well who would share with the rest of the world on good undervalued stocksright?Before making that purchase, always conduct your own research into the best penny stocks with thehighest potential for growth. You should be looking at penny stocks that are trading at least 100,00shares per day so that it is liquid enough in case you want to sell them to make a quick profit. The worst
thing that could happen is you’re holding on to a penny stocks that is nose diving with no takers to cut
your loss.Throughout your research, you should be able to see a pattern on penny stocks that experiencesearnings breakout. The highs are usually related to new product launches or can be explained. It is also agood thing not to trade more than 10% of the penny stocks daily volume.
When it’s finally time to make
the purchase, use your brokerage account and start small. Make sure that
your brokerage account is keeping records so that you’ll be able to retrieve the information especially
when taxes are concerned.Last but not least, never fall in love with a stock that you are unable to make an informed decision when
to sell it especially if you’ve reached your target and it’s to make an exit. After all, stocks are aboutmaking profits, if you’re not capable of doing that, perhaps it’s just not your cup of tea.