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Penny Stock Investing



Penny stock investing is one of those professions where your always on the edge of you seat, I imagine someone in the world series of poker feels the same way. Except we feel this every time we have money in a trade. In this market, penny stock investors can attain huge gains quickly, but they can also lose all that profit in the blink of an eye. Some who trade in the otcbb market make a living with this "wild west" style of trading. Others will lose their trading capital as they make poor choices on penny stocks.

When investing in the penny stock market, you're buying low priced shares of a company hoping to make a big splash in the corporate world. Often these companies have a product or idea that makes sense and investors can easily see why the future of this company looks bright. In the penny stock market, it's not all about products and dreams though. When buying penny stocks you need to look at the future outlook of the company from a business perspective.

If you buy penny stocks with weak structure this could mean the loss of your whole investment. There are many ways to check the structure of a company in the penny stock market but with these smaller companies there are often hidden issues that are not highlighted in the latest press releases. The first thing to look for when investing in penny stocks is the share structure of the company. You will also want to look at the balance sheet of the company as well as the history of the companies SEC filings. If the company is a pink sheet stock, then you will have no filings and the process becomes even more difficult.

Share structure is a main issue when penny stock investing. If the stock is at a price you like and you notice that the float (how many shares are currently being traded in the market) is low this is a great sign. You are not finished yet though. You must look at the authorized shares (how many shares the company can add to the float without filing) if the authorized shares are much larger than the float then the company can add more shares to the market. This becomes a supply and demand problem. With more supply the price drops. Sometimes the price will drop dramatically.

When trading these otcbb stocks, you must understand that the company needs to survive. They will dump the shares into the market to create capital. When the price becomes to low and the authorized shares are at the point where they are running out, the company can reverse split. Then you will lose many of your shares and the process begins again. If you buy penny stocks, you also want to ensure the company does not have a history of this behavior.

Penny stock investing means ensuring your taking the time to read the filings, ensuring there are no "pumps" pushing your stock. Pick the right penny stocks and watch them run.
About Author Keith Guyette :

Buy penny stocks http://www.thepennystockblog.com/buy_penny_stocks.html but be careful. Use http://www.thepennystockblog.com to help navigate this dangerous trading environment and keep track of our hot penny stock picks on our blog http://www.thepennystockblog.com/blog


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Article Added on Monday, February 8, 2010
Other Articles by Keith Guyette

•Buy Penny Stocks
This question is not an easy one to answer. The answer depends on many variables. We'll start with who should not buy penny stocks. You should not buy penny stocks to invest in the college education of your children. It's a bad idea if the sole investment in your retirement portfolio is penny stocks. Having one or 2 penny stocks in a large retirement portfolio is great. But who wants to retire with a penny stock, if your luck that early buy will be trading on the nasdaq. Normally though, penny...

•Penny Stocks Trading
Penny stocks are traded by novices as well as professionals. Some traders use penny stocks as a tool to learn trading, while others are more adept at making money in this market. Penny Stocks are cheap, and that is why they are called penny stocks, although not always costing a penny most penny stocks range in price from $5.00 to .0001. Most investments into penny stocks turn into losses. There are many reasons for this, a main reason is that the company shares very little information with the...

•How to Find the Lowest Price on Penny Stocks
Trading the low priced micro caps, penny stocks, or pink sheets is a “High Risk High Reward” style of trading. I have found that one of the most profitable ways to trade these penny stocks is by finding the bottoms. If you are correct and find the bottom, the stock has nowhere to go but up. If you are wrong and miss the bottom, no one wants to “catch a falling knife”. When a penny stock is bottoming, it has dropped to a new recent low. This could be as dramatic as the lowest price in years or...

•Investing in Penny Stocks
When you begin to look for penny stocks for an investment, there are many decisions to make. Penny stocks are very speculative, which means if you buy the wrong stock at the wrong time, you could lose a lot of money. That being said, there is a lot of money to be made trading speculative stocks. You must do your research, learn how to chart and trust your instincts and knowledge. There is no hoping. Doing this, you may be able to begin making a profit quickly on a relatively small...

•Penny Stock Picks 6 Rules to Follow
Penny stocks are high risk, high reward stock plays. When buying these high risk stocks you must pick the right stock to buy at the right price. If you pick the wrong stock or you time your purchase poorly you will lose some money, maybe all of your investment. On the other hand with the right stock and the right timing you could make a huge profit on a small investment. This is stock trading and all stock trading is unpredictable, this becomes even more apparent in penny stocks. Even with...

•Hot Penny Stock Picks
When trading any security you really need to do your homework. If you do not, and the price per share drops, you have no one to blame but yourself. Stock picking sites and bulletin boards often allow a trader the benefit of finding many emerging companies. These are great places to start but you must always do your own due diligence. If you are unsure you should try personal finance training or speak with a stock broker before investing. There are many different types and styles of pick sites....

•Penny Stock Tools
We all know that Penny Stocks are a risky investment. To reduce the risk of trading these stocks you must work on some basic guidelines of what the company looks like as well as the chart of the specific penny stock. The more knowledge you have about reading charts and the back grounds of penny stocks, the better off you will be. Research is the key to finding successful penny stock picks. You will need a stock screener to find stocks that meet your first criteria. You will also need some help...

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