Due to low market prices, some investors consider penny stocks as highly risky and unstable forms of investment. One of the reasons of it being risky is the high volume of trading. Since the penny stocks are sold and bought at low prices per share, a lot of investors actively engage in this kind of trading. Also, penny stocks do not have stiff reporting standards. Registered penny stocks companies do send filing to SEC, but these financial statements are not up to par with other exchange-traded companies.
So, how do you get legitimate penny stocks weekly update?
In order to earn revenue from your penny stocks, it is best that you study how money flows from the share.
- Always examine the stock prices. Before buying penny stocks, it is best to look at how good the prices are. Just like other things, when something is too good to be true, it is most likely not true. One of the things to look out for in penny stock trade is the pump and dump scheme.
- It does not hurt to do your own research. Involving yourself in a trade that is known to be risky entails great responsibility on your part. In fact, most successful traders spent hours and hours in front of the computer to analyze trends in the market. Gaining profit in penny stocks rely heavily on right timing, so do your research.
- Look for patterns. Review the previous performance record of the company. Research more on the high and low points in the stock prices of the company. Eventually, it will give you an idea on how to predict the right time to buy and sell your penny stocks.
- Make use of different technical software such as trending and charting to identify a successful trading period in penny stocks. Although this does not fully guarantee that the prediction is true, it will supply you with the future development in penny stock prices.
You can also find available investment software that can help track the prices of stocks and funds, as well as accumulate news about the company.
- Make sure you know how to read and analyze basic financial statements such as balance sheet, cash flow and income statements. This will help you a lot in determining the factors that can influence the rise and fall in penny stocks. Even Warren Buffett suggested that any investors need to know the basic principles of accountancy and stock market history.
- Be always wary of scams. The least thing you want to end up with is loss of your investment. It is best to look for red flags.
Any investor should know when to reject stocks. If you do not see a particular stock traded on bulletin board and over-the-counter, then it is best not to risk your dollars. Watch out for companies that only earn less than $10 million in a year. There are also email marketing campaigns sent out to potential investors about a penny stock company recommendation.
Most likely, promoters do these to generate hype within the community. Lastly, if you do not know the company, the people behind it and its history, then it is better to reject them immediately.