Hot Penny Stocks - A Beginner's Guide To Making Profit

So you came across the term "penny stocks" and you wonder what penny stocks exactly are

? Penny stocks are stocks that are valued between some cents and $5. In addition they are traded thinly - this is how the SEC or the Securities and Exchange Commission puts it. They are also sometimes called "the slot machines of the equity market" due to the risks involved here. Most of the penny stock picks become worthless, but one occasionally becomes valuable. Some of these penny stocks also jump in price and fail. But there are still those hidden gems. If you want to start trading penny stocks, it is highly recommended to spread your money over manifold stocks. In this way your chance is higher picking a winning penny stock.

If you are an investor who is interested in penny stock picks, you have to consider your portfolio's current state and a company's recent history before you invest. If your portfolio is heavy on certain industries such as telecommunications and pharmaceuticals, it would be impractical and unwise for you to invest in penny stock shares. Well, investors like you may use penny stocks to expand your portfolios while attempting to earn quick profits.

Most penny stock trading experts also ask such investors to study a 12-month pattern prior to purchasing a stock. Oftentimes penny stocks are start-ups with no history or reputation. But they can also be companies that were established once and have fallen in value due to certain circumstances. Anyway, such 12-month analysis must be substituted with a 30-day review before decisions on penny stocks investment are made.

Moreover, because penny stocks are usually sold outside of major exchanges, you have to analyze over-the-counter listings to see speculative opportunities. You can search the Internet for websites that offer quotes on a per-minute basis. Websites offering a transparent list of rules for stocks are another great place to search. Make sure that you find honest resources for penny stock picks. A lot of websites present informative articles as well as OTC stocks daily analysis.

Select an online broker that has well-balanced tools and fees to suit your needs. Use these tools to evaluate prospective penny stocks.

When it comes to day trading, the higher the risk, the higher the rewards. This is true when it comes to day trading penny stocks as much as anything else. So when you start investing in penny stocks, you need to be aware that you are playing a delicate game with heavy profits available as a reward.

Happy trading!.

by: Lara Goldberg

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