Methods To Make Use Of When Picking Penny Shares

If an investor has the best penny share picks

, it doesn't necessarily mean that he or she will yield the maximum profits from the said stocks. Investing in the right stocks is only half of the equation. What is left to do, which is actually more challenging, would be to actively know when to wait or when would be the perfect time to sell the shares before the prices of the shares decrease.

Needless to say, investing in penny stocks is not for those who put their money and just wait and see for the share prices to pick up then sell. While the same strategy works for "ordinary" stocks, it does not work as smoothly with penny stocks. This is because the volatility of prices in these stocks is higher compared to that of stocks in major markets. The value of stocks can go down and move up in equally the same quick pace. Thus, it is important for people investing in penny shares to have an entry and exit strategy before deciding to start investing in them. The markets should be monitored carefully, keeping stops close, and moving on to the next opportunity if the investor starts to lose more than what he or she can afford to lose.

Even if the investor has the "best" picks in penny stocks, it is still possible to lose not just some,but all of his or her investment. To avoid losing a lot, the investor has to first decide the percentage of his or her investment capital that can be afforded to lose, even before any money is spent. If the prices are near the level of losing, the investor has to sell and move on. The same guidelines apply for gains as well. If the exit plan was to sell when the investment reaches at least a profit level of twenty percent, it has to be done right away if the share prices reach that level. Strategies should be implemented swiftly, as prices for this kind of stock are very volatile.

Once an investor has invested in the best penny shares, it is important for him or her to monitor their performance closely in order to get maximize the profit potential of the shares. There are a lot of resources that can aid the investor monitor the performance of these stocks.

To start with, television channels that deliver on business news only can be a good source of information. Investors can find out which of these have shows or news programs that feature or report on performance of penny shares and companies that issue them. Finance and business web sites are also great resources for tracking the performance of these stocks. An online search can be done and investors can already spend some time everyday to get the latest news on these stocks.

For more savvy investor, the most reliable data supposedly can be obtained from a stockbroker or financial adviser. Any decision about penny shares must be discussed between the investor and the broker or adviser. If there are discrepancies in the information that the investor gets from different sources, he or she must also discuss this with a financial advisor.

by: Shawni Groezinger

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