Article by Ryan Ashton

Ask any investor what a stock trading under $ 5 is and they will tell you it is a penny stock, microcap stock, or nano stock. These three terms are for the most part interchangeable. However the broader definition of a penny stock refers to a business’s aggregate value of its outstanding common shares, are more commonly known as its market capitalization rather than its stock price. However there is no set term that completely defines a penny stock.

You can leave those penny’s in your piggy bank collecting dust, or you can take them out and use them to invest in Penny Stocks. Penny Stocks are stocks that usually trade below $ 5 per share. Sometimes these stocks are sold for just a fraction of a cent. Here are some of the negatives: Penny Stocks are usually high risk stocks that are sold by smaller companies that are seeking money for expansion. These stocks tend to fluctuate greatly in price over time and have a rather low track record. On the positive side you can invest in a thousand Penny Stocks for just a few dollars. If this sounds like an exciting way to begin investing in the stock market, here are the steps to investing in Penny Stocks.

Instructions

Things You’ll Need:

* Computer and internet.

* Information websites on Penny Stocks.

* Information websites on Penny Brokerage firms.

1. Step 1

Use your computer and the internet to research Penny Stocks and Penny Stock Brokerage firms extensively. The internet websites you search will show that Penny Stocks are not a sure bet by any means. Besides researching the stocks and firms online, look for any other information you can about Penny Stocks and Penny Stock Brokers. Do your homework!

2. Step 2

Make the best decision possible after you are sure you have all the necessary information for investing in Penny Stocks. Only buy your Penny Stocks from an experienced and proven brokerage firm. And if you are a new investor start ‘small’.

3. Step 3


Know your Securities and Exchange Commission (SEC) rules: 1. You must be approved for the transaction and be given a written agreement to the transaction by your firm.
2. The firm must furnish you with a document describing the risks of investing in penny stocks.
3. Your broker must give you the current market quotation for the penny stock as well as the compensation the firm and its broker will receive for the trade.
4. The firm must send monthly account statements showing the market value of each penny stock held in your account

4. Step 4

As you continue to learn and invest, Penny Stocks should add up to no more than 10% of your total investment portfolio. Penny Stocks are a very risky investment but if you are diligent, you may become one of a small group of investors who have experienced a tremendous profit. Research thoroughly, invest slowly and carefully and this could fatten your retirement nest egg.

Tips & Warnings

*
Research each investment opportunity thoroughly and ask questions about how the company operates.

*
Up to 70% of investors lose money on penny stocks.

*
Watch out for brokers who are only trying to sell and don’t have your best interest in mind.

Click Here! for information on how to invest in penny stocks and Turn $ 1,000 into
$ 1 Million

Using Automated Stock Trading Software

Article by Mervin Banks

The Internet has brought so many useful tools to the stock market investor that it’s difficult to imagine a life before this technology existed. Personally, I couldn’t live without Google Finance as it has everything I could ever want in an application. Best of all it’s free. I constantly get emailed about the latest software available from various mailing lists I’m on but I tend to stick to free software and spend my money on things that matter. That of course would be stocks and shares. On the other hand, I did receive and email recently offering my access to automated stock trading software which I found extremely interesting. Is it possible to get software to do some of the boring monotonous tasks that I have to do myself? Would I really be able to trust software to do such an important and complicated thing for me?

In reality, you do get what you pay for and some automated tools will offer so much more than other. The software works on from parameters that you setup the first time you use it. It then trawls through whichever data you’ve indicated and provides with you with a list of results. From there you can decide whether you want to proceed and buy the shares or not. It shouldn’t be seen as something that will take over every aspect of investing in the stock market but merely a tool to take over some of the more repetitive tasks.

If you are an inexperienced investor then this software might not be of any use to you. As I mentioned before, the software relies on input from the user at the beginning. So if the user doesn’t know what he or she is doing then the output of the software will not be of any use. This is something think about before you go splashing any of your hard earned money on software like this.

In conclusion, automated trading software can be a useful addition to your stock trading tools. It’s especially useful if you are interested in day trading or options trading due to the way this type of market works. It does rely on you being experienced in investing so bear that in mind before purchasing. If you’re still reading stocks and shares for beginners books then this is perhaps a little too advanced for you.

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Penny stocks are the stock market’s equivalent of junk
bonds in the bond market. Investing in penny stocks can be
much riskier than trading mid to large-cap stocks.
Severe and long lasting drops can quickly occur, with
little warning. Conversely, penny stocks can yield rapid
gains, sometimes up to +1000% in the matter of days. This,
coupled with the low price, often lures new investors into
trading penny stocks.

The difference between penny stocks and blue-chip and mid-
cap stocks is important to understand before you invest.
Whereas the market performance or normal mid to large-cap
stocks is driven primarily by fundamentals, penny stock
performance can be much more pliant to investor
speculation. A company’s market capitalization (cap)
derives from its stock price multiplied by the shares
outstanding. This number is therefore the sum dollar value
of all of the company’s shares at that time. So a penny
stock has less shareholders than a mid-cap stock and
trades on a far smaller volume per day. This is why penny
stocks are so speculative. Any sudden change in demand or
supply for the stock will be felt quickly throughout the
entire framework. As earlier stated, this can be good (less
people to share the profit with), or bad (less people to
shoulder the loss). Penny stocks are much more volatile
than mid or large cap stocks and this is why many investors
regard them as a gamble.

One of the justifications for investing in penny stocks is
the notion that many of today’s blue-chip stocks, such as
Google and Microsoft, were once penny stocks. This is a
misconception, though, because after you adjust for stock
splits, it becomes apparent that these company’s shares
were actually almost never trading on par with penny
stocks. Investors often overlook this fact and look for the
next Microsoft when buying penny stocks.

Because of the lower trading volume, penny stocks lack
“liquidity,” which means that investors can find it more
challenging to buy or sell. Just like with junk bonds, lack
of liquidity opens the gate to stock manipulation by
fraudulent investors.

Many novice investors are eager to jump into the penny
stock trade because of the potential for enormous gains.
Just as with gambling, though, an investor must be ready
to lose everything that they have invested when dealing
with penny stocks. Furthermore, historically speaking,
huge rises in penny stock value are incredibly rare. Even
in the few instances where this has happened, the price is
usually unstable, and falls as quickly as it rose. If you
are new to investing, be sure to research the company in
which you are investing. Analyze their fundamentals and
be aware of the potential risks involved in the penny
stock trade.

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Author: Taft Coventry
Article Source: EzineArticles.com
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So what is the tip for stock market investors in such circumstances?

The best course is to buy stocks when the prices are low and wait patiently for them to rise. Fix up a moderate and practical income target. For example, you may fix a target to make 10% profits on your investment.

Do not succumb to your greed thinking that the prices will continue to rise further and you will be able to make 50% or more on your investment. Always keep in mind the volatile nature of the stock.

A golden tip

A golden tip for stock market investors is to buy when every one else is selling and sell your stock when everybody is buying. Do not succumb to peer pressure. Do not run after the majority. Think out of the box. Do not consider yourself a fool for not joining the party that every body appears to be enjoying at the stock market.

Never invest in unknown penny stocks

Even if you cannot resist the temptation of buying when every body else too is buying, do not invest in unknown penny stocks. Do not try to follow the secret, insider’s hot tips that your friend’s knowledgeable friend may try to whisper in your ears.

Quite possibly the price of the penny stock might have tripled during the last fortnight but that was before your friend’s friend started to buy the stock. Chances are that the promoters of the company had started a buying spree for the said stock and spread rumors about the likelihood of the company being acquired by some foreign investor.

Future growth vs past performance

When you try to analyze the value of a stock before buying it, you must consider its chances of its future growth rather than relying on its past performance.

Past performance of any stock, even its promoters warn the investors in their ads, is no guarantee for its future performance. You may argue yourself into buying a stock because it has doubled in the past one year. Instead of gloating over its double growth, you should try to analyze the reasons for that ‘spectacular’ performance.

Could it have been the lack of serious competition? Could it have been the supply of raw materials at reduced costs just because the raw material suppliers had recently entered the market and wanted to popularize their product?

If you are satisfied with the reasons, go ahead and buy the stock of that company.

Allow time for your stock to grow

Allow some time for your stock to grow in terms of its market value. Do not buy a stock and expect its price to start rising from the next day. If you join a good company as an employee, do you expect your salary to be increased in one or two months? Moreover, the value of good stocks grows slowly yet surely. There generally are no spectacular quantum jumps. If there are any, they may have been manipulated and as an intelligent investor, you may be wary of buying such stocks.

Remember, if money could multiply in matter of days, everybody would invest in stock market and leave every other business. Growth of any asset takes its own time and the investor should cultivate the culture of patience. Ideally a minimum horizon of one year should be a good time.

Diversify your portfolio

‘Don’t put all your eggs in one basket’ is an age-old business advice and it stands good for all times. Even the best of companies may face hard times due to reasons beyond their control.

It is therefore recommended that you should diversify your investment portfolio among a number of good stocks. Diversification, however, does not mean that you should scatter you investment in scores of stocks. This may endanger your focus, as you may not be able to keep a track of the performance of each stock. They may add to your confusion.

Diversification does not only means dispersing your investment in various stocks; it also includes different investment plans such as IRAs, Education accounts, DRIPs, ETFs and so on.

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Author: Micheal James
Article Source: EzineArticles.com
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Let’s break it down in a very simple manner.

Penny Stock Trading

A stock trader is someone who buys and sells stock for a very short period of time-could be five seconds or five days.

The goal of the stock trader isn’t to plant money into some stock, water it and hope it will one day grow tenfold. The goal is to make some money and get out-to play the swings.

A penny stock trader is interested in the swings-the ups and downs. A penny stock with good volatility is best. It doesn’t matter if a stock opened at $1 on Monday and closed at $1 on Friday as long as it bounced around in the middle.

Penny Stock Investing

Unlike the trader, the penny stock investor will buy a stock and hold onto it for a longer period of time-could be a few months or years even.

The goal of the stock investor is to buy a stock and watch it grow to something larger. For instance, if the purchased penny stock was $1 per share today and $1.50 per share in five months, the investor is happy.

The investor holds the stock constantly and therefore all that matters is the buying price and the eventual selling price and not what happening in-between the two.

By in large, those who buy penny stocks tend to be traders-buying stock at $1 today and selling for $1.15 tomorrow and re-buying at $1 the next day. Whether you’re a penny stock trader or investor, penny stocks represent a fantastic opportunity for profit.

There are penny stocks for just about everything you can imagine. Want to know some “movie production penny stocks” that are trading on AMEX, Nasdaq and the NYSE? Check out that link. It goes to PennyStocksCapitalist.com, which is a site for penny stock investors and traders.

Another hot industry is oil and gas. The Nasdaq has some penny stock action in this industry. Here’s an article about “Nasdaq Oil and Gas Penny Stocks” from PennyStocksCapitalist.com. Check that out.

Author: Jason A. Martin
Article Source: EzineArticles.com
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