Three Tips For Buying Penny Stocks
I love penny stocks
the opportunity for huge gains are always exciting. I know a guy who made millions from just one little penny stock he was following.
Hearing stories like that always fuel my passion.
However, the potential for big gains also comes with the potential for big losses. Like they say, No Risk, No Reward. I hate losing money especially with penny stock investments.
Unfortunately, nobody can guarantee 100% accuracy when buying penny stocks. Youre always bound to have a loss or two in your portfolio. However, there are a few things you can do to reduce your risk and improve your chances at finding big winners
Without further delay, here are three tips for buying penny stocks.
Penny Stock Tip #1 Research FIRST, Buy SECOND.
As simple as it sounds, it bears repeating. Always do your own research on a penny stock before you pull the trigger and buy the shares. Look, the shares will still be trading there tomorrow, and next week, and next month (as long as its a real company). So waiting a little bit to conduct your own research cant hurt.
Besides, if your research on the company is good, then you have all the more confidence in buying the stock. And if you find something bad well at least you sidestepped a land mine.
Penny Stock Tip #2 Patience Is A Virtue.
When it comes to patience, nowhere does it pay off more than with penny stocks. Remember, one of the reasons the profit potential is so huge in penny stocks is because theyre often mispriced by the market.
These miss-pricings dont happen overnight, nor do they work themselves out overnight. So dont go buying a good penny stock and get disappointed if it doesnt move or worse, goes down a bit.
For a stock to move higher, other investors need to see the value in the company. Thats what drives the price higher and thats when youll start to see it move. But this may take some time, so dont expect miracles overnight!
Penny Stock Tip #3 Always Have A Plan.
When you start buying penny stocks, you should always have a plan. Have an idea in place about what you expect and where you might exit a trade. Understand why you think a company is undervalued and what their performance should look like.
And most importantly, remain flexible.
For example, if youre buying a penny stock because revenue growth is huge but one quarter the numbers are disappointing, dont be afraid to make a decision on the spot. If its a one-time fluke or something the company can correct, keep hanging on. However, if its a sign of bigger, longer term problems, then pull the ripcord and get out.
So there you have it, three tips to improve your results when buying penny stocks. Now go make some money!
Until next time,
Brian Walker
Category: Penny Stock Tips
