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

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 - that's how 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. Oftentimes penny stocks become completely worthless. However, some of them become highly valuable. Some of them jump one day and are worthless one day later. 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.

In case you are a penny stock investor who is interested in penny stock picks, there are two things to carefully consider: a companies recent history and your portfolio's current state. 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.

A penny stock trading expert will also tell you to study a 12-month pattern before buying a particular stock. Penny stocks can be start-ups with no strong reputation. But they can also be companies that were established once and have fallen in value due to certain circumstances. Anyway, it is still highly recommended to conduct a 12-month analysis and a 30 day review, before you make a final buying decision.

Moreover, because penny stocks are usually sold outside of major exchanges, you have to analyze over-the-counter listings to see speculative opportunities. A good place for this is the internet where you can take advantage of quotes offered on a per minute basis. Websites offering a transparent list of rules for stocks are another great place to search. Of course you need to make sure that you do not fall for scam sites. A lot of websites present informative articles as well as OTC stocks daily analysis.

It is also highly advised to to select an online broker whi is reputable and has well balanced tools that fit your needs. Utilize these tools to research on prospective penny stocks positions.

by: Dan Miller.

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