Penny Stocks - Find Penny Stock Picks That Double

Investors View Magazine

by Michael Swanson

Penny stocks are stocks that are trading for under $5.00 per share many of witch are on the OTCBB. Many of them go for under $.050. For this reason, these are very attractive stocks to potential buyers looking for huge upside potential, because everyone is looking to make money as quickly as possible with as small an investment as possible.

Penny stocks offer this possibility for large gains in a short amount of time using a small amount of money. While these stocks can be a smart and profitable to buy, you should take care to do some research before you plunge in and invest in them, because there are many penny stocks that are just hot air promotions.

You really need to do your research before investing even a small amount of money. Remember, those $5 purchases can add up quickly, and you want to make sure that you are placing it in the best places for earning potential. Check into the background of each company that you are considering. Look closely at their history, their products, and its growth over the past few years. Make sure the companies are real. You have to be more careful with pink sheet stocks, because there is less information available on them.

If you are new at penny stocks, pick a company that is marketing an idea with new technology. These companies have less competition and will help their popularity to skyrocket faster than those with established competitors. You are probably entering the trading market with high hopes of hauling in a profit, but you must remember that most successful investors have achieved by having a well-defined investment strategy. You have to know when to jump in and when you make your exit.

If you are not experienced in the area of stock buying and trading, you may do well to work with a professional who can help you at least learn the ropes. You could choose a specific broker or an online company for this task. It will be well worth the fee you will have to pay for some experienced advice. Subscribe to my free newsletter and you'll get my free trading guides on how to manage your risk with stop loss orders. We keep track of the 50 hottest stocks.

You also can do a lot of your own research online. Penny stock blogs are great places to find helpful information. You can also read the forums for the latest info in penny stocks. However, it is always a good idea to back up any information found there with your own research.

You can also look at company charts to help you know which stocks to trade using technical analysis. You can get a good general idea of the direction any stock is heading by looking as its long term and short term charts. If you see a stock heading steadily downhill, you will know that this is a bad sign. Watch for steady uphill trends that signal success.

With penny stock tips you will find that the higher risk equals a bigger profit. As soon as you see that you are making a good profit, it is a good idea to pull out. You should realize that only about 30% of those who invest in penny stocks actually make a good return, so you will have to play your cards well. These are high-speculation buys, and for this reason, if you see a 30% or 40% profit in a day, it is recommended that you take it.

Penny stocks are not long-term investments, but fast money gambles.

It is generally a good idea to spread your money out in a variety of promising stocks so that you do not have all your eggs in one basket. This way if one stock turns out to be a high loss, you will not be disappointed as you have other stocks to watch grow. This can be a profitable business, but also frustrating when you do not always see the growth you expect. So do your research and keep in mind that you cannot control or always foresee what move is coming next.

So do your research, have a strategy, find an advisor who has your interests at heart, and give it a shot. Remember, try to relax and enjoy the process a little. What is the fun in making a little extra money (and losing some) if you cannot enjoy it?

I've been dabbling in all sorts of stocks - high priced stocks and low priced stocks - new companies and old companies - and have to admit there is a certain fun in penny stocks. I've developed what I call the Two Fold Formula to identify the best stocks that can give you the best potential gains with the least amount of risk. Get it by clicking here.