Most people, especially those who want to be an investor are asking about what are penny stocks. What they might know is that they have to spend a lot of money to be a stock investor. Let’s learn more about penny stocks so you can understand more before investing your money on this type of stock.
About Penny Stocks
Unlike the regular stocks, penny stocks are offered by particular companies along with a very low price. This is the reason why the program is known as a penny stock. You might ask how much are penny stocks? Just imagine that you only have to spend around $1 up to $5 to get stocks from a company. It is considered as a good investment for beginner investors who don’t have a lot of money. By joining this type of investment, you can buy more shares and get benefits from it. Indeed, you must learn more about the benefits as well as the risks of joining this stock investment.
The Way to Start Penny Stock Investment
The steps to start a penny stock investment is similar to the regular stock investments. You have to find a credible stockbroker. You don’t need to get confused because you can easily find a trusted online stockbroker to buy the penny stock. Then, you just need to follow the instructions and get the shares The most important thing is that you have to find enough information about a penny stock and also the online stockbrokers. Just make sure that you have using the best online stock broker to help you earn profit from the investment. The list of the best site for penny stocks will be explained below.
The Best Sites for Penny Stock Investment
Nowadays, there are a lot of websites that offer penny stocks along with similar benefits and great deals. What you have to do is selective in choosing the sites. Find out the complete information and compare it first before deciding for the best one. Here, we have the list of recommended sites you can use to start a small investment.
This is a popular online penny stockbroker due to its good reputation. Beginner investors love to use this site because of the platform and its supportive features. You can use three different platforms which are E-Trade site, Power E-Trade, and E-Trade Pro for free. The stockbroker also has two great apps for investors who want to do their investment activities from a mobile device which are E-Trade Mobile and OptionsHouse. Investors can start to buy shares from penny stock immediately without any significant problems. Interestingly, you don’t need to spend your money because there is no commission or fee.
The best part is that you can stream market data in real-time. You can also find clear information from the expert analysts that help you to make a low-risk decision. The features are also good enough for beginner penny stock investors in which you can use the dashboard to track your account, examine market data, trading, and many more. As a beginner investor, you need to learn many things and this site provides you with webinars. It discusses a variety of topics such as trading options, how to analyze the stock, portfolio, and many others.
Just like E-Trade, TD Ameritrade also offers $0 commission or fee. The features work a lot for beginner investors. By using the services from this stockbroker, you know the penny stocks to watch for. Investors can reach that goal because they can use research and data, portfolio guidance, and many other features. You can use two different trading platforms which are TD Ameritrade web and Thinkorswim. For mobile devices investors, this stockbroker offers TDA Mobile and TDA Mobile Trader apps. The customer service is ready to answer your questions about penny stock by Facebook Messenger, iPhone Message app, Twitter, Apple Business Chat, and many others. The idea is that you will get all the points before taking actions in penny stock investment.
This stockbroker helps beginner investors who want to start penny stock investing a lot. It has a great platform and features to do the process. This is a good option for investors because it offers a $0 fee or commission although the broker also offers a service with a low commission. Let say, if you have traded over 300.000 shares a month, you can only pay around $0.002 or even less per share. You can do the activities by using the Client Portal platform and IBKR mobile app. Both of them offer great features for effective penny stock trading.
Tips to Find the Best Penny Stocks
Despite the three recommended websites above, there are still several websites you can use to start a penny stock. Before that, you have to learn how to research penny stocks so you can trade comfortably. The most important thing is that you get a profit from this investment because you are choosing the right penny stock.
You still have to consider the price although it is a cheap investment. For example, you might think that it is better to buy 10.000 shares at 10 cents than 100 shares at $100. In this case, you have to check the detail such as the shares available, float, diluted level, and the average volume. The key is finding complete information first before taking action.
Moreover, you also need to check the penny stock companies. You may spend your money on lucrative companies so you can get profit from the investment. Most investors will research by applying a fundamental analysis. It means you have to look at the financial condition of the company. On the other hand, you can also search by applying technical analysis. In this case, you are analyzing it based on the chart. Don’t forget to check the trend and direction of the stock. When you know and understand all of the elements, you can start to invest your money on penny stock and get more money from it. It is also a way to limit serious risks during investment.
It is better to combine those two types of analysis for a more accurate result. Let say, you check the detail of the company first such as its management, revenues, debts, contracts, lawsuits, and many more. When you get sufficient information, you can start to use the investment chart. The chart helps to decide the trend whether it is an upside or sideways trend. If the trend is upside it means the price will be increased significantly and vise versa. On the other hand, the sideways trend shows that the supply and demand are equal. As a result, there will be no change in the price.
Some traders or investors also use a scanner to find the best penny stocks. The idea of this scanner is to get companies with the highest probability of going big. The scanner works to narrow the huge list of stocks based on the type of company and profit the investors want to get. The device consists of several filters in which you can classify the penny stocks based on the chart patterns, price, performance, and volatility. By using this classification, the chance to get the best company that might be big in the future is bigger.
You can also find the best stocks by using several parameters. First, you have to know the breaking news of the stocks. The breaking news determines the lucrative level of the company. Remember! Find a lucrative company before investing in the penny stocks. Second, just check the float or the number of shares available to trade. The standard float is below 100 million shares or 50 million. Third, check the relative volume. Relative volume is an indicator that compares the current volume and past trading volume. The information helps you to make a good decision while choosing the best penny stock. It is better to find high relative volume stocks because a lot of investors or traders watch and trading this type of stock. The higher the relative volume, the more liquidity for you to trade.
Important Things to Consider before Starting Penny Stock Investment
Now, you get more understanding about what are penny stocks from the explanation above. Let’s continue it by learning about several important elements you need to consider while investing your money in penny stocks. For example, you have to understand the term penny stock movers today. By understanding the movers, you know the best performing penny stocks today and the worst-performing penny stocks. Even, you must check the penny stocks on the move daily before trading.
The penny stocks are changing because of several conditions such as the development of the company, the imbalance trading, expansion, and returns. The detail helps you to decide whether you have to buy or sell the shares to get profit from it.
Technical Analysis Penny Stock Patterns
Another important thing you have to understand to decide whether finding $1 stocks to buy now or not is the technical analysis patterns. It helps you to decide whether you have to buy or sell the shares.
Bottoming Out Pattern
In this pattern, you will see that the trend will go down over the months at first. After a couple of weeks, the trend moves to the sideways. Commonly, it happens after a long sustained share price.
Price Dips Pattern
The key to this pattern is deciding the trading in the right place at the right time. You may buy penny stocks below the recent or current price. Then, you just have to wait until it is time to sell the shares.
Topping Out Pattern
This pattern is the opposite of the bottoming out pattern. The share price is higher and it stands for a long time. Suddenly, the price is decreased significantly. If it is so, most investors will sell their shares and it makes the price in an uncertainty condition.
One of the important questions is how to use penny stocks to earn more money. The thing you have to consider is that you can make money from penny stocks. Indeed, you have to understand the way to do it otherwise you may lose your money.
Find a Company that Can Make Money
The main purpose of taking penny stock is to make money, right? If it is so, you also have to find a company that can make money. This is the reason why you have to check the reputation and profile of the company before spending your money to buy its shares. If the company can make money or create profit, you can consider buying penny stocks from it. On the other hand, if the company often loses money and has a hard time to make a profit it is better not to invest your money there even if it is for penny stocks.
Find a Company that Has Substantial Assets or Cash
A company with a lot of substantial assets or cash is a strong company. The company has enough money to develop their business. Because of that, investors are sure to invest their money. Indeed, you can buy a penny stock from a company that has substantial assets or cash.
Find a Company that Has Clear Strategy
You also must find a company that has a clear strategy before buying their penny stocks. If the company has a strategy it means they know the future of the company. At least, they know how to make money and give benefits or profits to the investors. The company has visions and missions to develop significantly. This is also making investors including penny stock investors sure to spending money to buy the shares from the company.
So, no matter the type of investment including if you are playing in the penny stock, you still have to think that you are doing a big investment. This trick will make you do the right actions to limit the risks. You will do research, buy penny stocks with good consideration, and patient in doing actions. This trick triggers you to find positive value, strong financials, and promising stocks. The next phase, if you want to make money from the investment is by selling your shares or stocks. Of course, you must do it at the right time. The little secret you need to know before selling the stocks is by waiting for the company to rebuilds and gain market exchange.
Tips to Minimize Risks on Penny Stocks
You still have to face risks on penny stock investment. The thing you can do it is taking the best decisions to minimize the risks. Let say, you have to be selective in selecting the stocks. You must choose stocks from strong companies. You may find it from a trusted market such as the OTC market.
Moreover, the companies have to pass through the U.S. securities laws and a high operation standard. You will also learn about Pink Sheet stock when you are learning about penny stocks. What you need to know about this type of stock is that you must avoid them. You can minimize risks by avoiding those stocks because they are a fraud. One thing you need to understand that companies do not only give you a return or profit but also minimize risks. Don’t believe in pump-and-dump scammers because this type of company offers a high-price share that even not on the penny stock market. It is okay to be a confident investor but you also need to know that it is not good to overtrade.
Overtrade leads you to mistakes and it might be a big mistake that makes you lose all the money. You just have to buy and sell at the right time, take quick profits, and stop when it has to be. You still have a chance to earn a lot of profit by doing this type of strategy. Playing safe is also necessary sometimes, especially if you might lose all your money because of a bad decision. In contrast, you have to focus on trading instead of investing in penny stocks.
So, what you have to do is trading penny stocks every day. You can start to learn how to make money by doing it while thinking the best penny stock picks for tomorrow. If you can limit risks, you will earn a lot of money from your penny stocks trading and investment. Everything needs process and you have to do the process wisely to get the best result just like what you are expected.
The point is that you can make money from penny stocks. Indeed, it is not as simple as you can imagine. You still have to learn so many things to earn profits. The best part of joining penny stocks is that you can start to invest or trade immediately because the price is cheap enough. Moreover, you can also buy a lot of shares. By buying and selling the stocks at the right time, you can be a great penny stock investor. When you are experienced enough, you will understand what are penny stocks.