Consider Penny Stocks For Solid Investing Returns

April 17, 2014

There are many reasons why investing in penny stocks (also known as micro caps) makes sense. They are a great option for many people because they are inexpensive to purchase and can realize a high return on just a small move in the stock’s price. Although they are named penny stocks, this does not mean that they are only stocks that sell for under $1. In fact, penny stocks encompass all stocks that sell for less than $5.

With micro caps, a very small change in the stock’s price can result in a very large profit for the investor. As an example, you will double your money if you purchase a $2 stock and its value shoots up to $4. With more expensive stocks, an additional $2 increase in the stock’s value may not mean all that much. A $2 increase on a stock that was selling for $70 is a very small increase in value. You can clearly see that a small increase in a penny stock’s value can result in a dramatic profit. Price increases such as these are considered normal with penny stocks. Because of this, there are many investors who focus solely on this lucrative sector of the market. Penny stocks like this one that make a simple, rolling pattern between two price points are frequently some of the best to focus on. These stocks are very predictable and easy to trade. Just wait for the stock to reach its historic top or bottom and then jump in on the trade. Such stocks are called “rolling stocks” and are very well suited for penny stock trading.

Why Are They Inexpensive?
Although penny stocks are very easy to trade and are usually very well suited for the stock trading beginner, there are some caveats you should consider before entering the micro cap market. One thing you definitely need to remember is that although penny stocks are inexpensive, they are inexpensive for a good reason. It could be that the company is still very new and they don’t have a well-established history. It could also be that the company was formally a much-higher valued company that has hit hard times. Definitely take the time to study a penny stock company like how PennyStock Whizzkid does before spending money to purchase their stock. Does the business they are in have long-term potential or are they in a fad market? Do they have a long history or are they a new start-up? What is their long-term viability look like? If things look questionable, don’t invest in that company and you could possibly short sell like this url recommends

Volume – It Matters
A penny stock’s trading volume is something else you should consider. In order to successfully buy and sell any stock, you will need sufficient volume to be able to quickly enter and exit a trade. If the penny stock company you are considering is a company that hardly anyone ever trades, it probably does not have sufficient volume to be worth your time. After all, if few people are buying and selling the stock and you need to quickly find a buyer for a trade position that’s going south, what do you do? You’re just stuck. That’s why it’s important to always consider trade volume before investing in any stock, always do your due diligence reading useful websites like this url which is an interesting read.

Watch Out For Scams
There is a popular scam that is perpetrated with penny stocks that you should be aware of as well. It’s called the pump and dump. In this scenario, a person will buy a tremendous amount of low-priced penny stocks and then post a lot of news articles about how great the stock is in an effort to quickly increase the stock’s value. This is called “talking up the stock” and it’s an illegal practice. All of the sudden good news about a particular stock causes people to take notice and they quickly jump in and start buying the stock, causing it to quickly increase in value. The person who is perpetrating the pump and dump will then quickly sell the stock after it increases in value for a quick profit. The large sell-off that follows can result in the stock’s price quickly plummeting. If you see a penny stock suddenly jump in value, you should be suspect of a pump and dump scam.

Penny stocks can be a great investment vehicle for both new and seasoned investors. Before you invest, take the time to learn all you can about this market and be on the lookout for pump and dump scammers.

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What Are Penny Stocks and Which Ones to Watch

June 27, 2014

Penny stocks about to explode

Ever wondered what penny stocks are?

Whoever thought a penny doesn’t go far has never heard of penny stocks. You will be surprised to know that these stocks are responsible for the vast majority of stock trading in the United States every day. But what are penny shares? Why are they hot favorites of both long-term investors and traders?

Penny stocks are stocks that trade for less than $5 per share. In the US, dollar stocks generally refers to any stock trading outside the major foreign exchanges. Many new investors are attracted by these stocks because of their low price and potential for rapid growth.

Micro cap stocks as seen by the entrepreneur:

Let’s take an example to better explain the meaning of small cap stocks to a businessman. Supposing you have a company that sells mechanical devices and everyone owning your device is happy with the quality you provide. You want to sell your device to the entire world, but are running short of cash and cannot manufacture the said product on a larger scale. So, you can raise that money by taking your company public and selling the stocks of your company to the common man.

If you sell your stocks at $1 rather than $10, it has a better chance of attracting the investors towards the company. They will be willing to give your company the benefit of doubt for $1 instead of $10.

Hence, for an entrepreneur penny stocks are a way to make their company public.

Micro Cap stocks from the trader’s point of view:

According to some traders, a dollar stock will mean a stock that trades for $1. Others will have certain categories into which a stock must fit before it is called a penny stock.

But all traders will agree to the fact that dollar stocks have the most potential to escalate in price and bring sizeable amounts of profits.

For traders, a penny stock will mean a stock that you sell as soon as they are in profit because they are too volatile to hold for a long time. In the investment world, the best time to gain money is to seize the first chance of profits the market gives you.

Micro Cap stocks as seen by the investment industry:

In the investment industry  stocks are simply opportunities. They are opportunities that can make returns that are unheard in any other type of investment. For brokerage houses, penny stocks serve as a major source of trading expenses. For new and upcoming companies they are a brilliant opportunity to grow and develop.

I hope that this information has answered the question of ‘what are penny stocks?’ There are many small stocks in the market, therefore take your pick and invest wisely.

All penny stocks may not give similar returns. Some penny stocks can give excellent ROI while others might not be so beneficial. While buying penny stocks, remember that they are extremely volatile, this is why it makes sense to sell them when you see their prices going up.

So, to conclude, volatile or not, high risk small cap stocks are here to stay. Why you may ask? Well, they represent an opportunity for traders to gain massive returns in the shortest time periods and brokerage houses they can be a huge potential resource of trading commissions. For fledgling organizations, they provide an avenue of growth. In other words, like it or not, penny stocks are an indispensable part of the great American dream!

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Forex Trading Platforms: Selecting One to Suit your Strategy

June 20, 2014

Online trading platforms have helped to revolutionise the forex market, both in terms of removing barriers to entry and improving the efficiency of individual transactions. With the concept of customisable platforms threatening to take this concept onto an entirely different level, the impact of technology is likely to grow even more pronounced.

There are a number of misconceptions concerning online forex programs, however, and these have the capacity to undermine traders’ individual chances of success. One of the most problematic assumptions is that all trading platforms have been created equally, and therefore offer similar benefits to users across the globe.

3 Things to Appraise Before you Select a Trading Platform

The fact remains that all penny stocks trading platforms are different from one another, and each deliver different advantages to individual practitioners. With this in mind, you should commit to making the following considerations prior to choosing your trading platform: -

ŸHave you Compared Brokerage Firms?: It can be easily overlooked that online trading platforms can be accessed through online brokerage firms, and these organisations should play a key role in determining your final selection. Brokers also offer access to an additional range of analytical tools, web based tutorials and research information, and these can prove to be invaluable assets in the competitive and constantly changing forex market. While technology can only ever be as effective as the individuals that utilise it, equipping yourself with an array of online resources can assist you in making for efficient trades.

ŸWhat Technical Indicators can you Access?: Technical indicators are extremely purposeful forex trading tools, which help users to gain insight into market movements and emerging economic trends. While all contemporary FX trading platforms feature a specific number of technical indicators, this varies depending on individual providers and their level of innovation. In addition to this, each platform includes different indicators and technical tools, so it is important to develop an understanding of which features are most beneficial to your trading strategy. Once you have done this, you can successfully choose a compatible and effective platform to trade from.

Can you Access Historical Data?: In the financial markets, history often serves as a strong indicator of what may go wrong in the future. This is why successful traders often have a certain level of determinism, which enables them to have a clearer understanding of the market and the underlying causes of change. Historical data can be crucial in helping you to comprehend the workings of the forex market, while also highlighting the performance of individual currency pairs over a predetermined period of time. As a matter of course, you should always check to ensure that your trading platform includes historical data and present this in a clearly defined manner.

Between the Lines

As an aspiring forex trader, it is all too easy to underestimate the importance of selecting the right trading platform. It is unwise to think that all platforms are identical, as there are subtle differences which distinguish them from one another. With this in mind, you should take the time to understand your own needs and preferences, and balance these against the range of forex trading platforms that you have access to.

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