How To Find Penny Stocks

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Important Facts You Should Know About How to Find Good Penny Stocks

Finding good penny stocks is like finding a needle in the haystack. Why? It’s simply because penny stocks are a dangerous commodity. With the so low prices, even a very small fluctuation in their price can either double your investments or cut them in half. Penny stocks are among the most volatile and variable investments in the stocks exchange. Companies listed usually have not history of stable or solid fiscal performance. You have to know that low-priced stocks can also be manipulated by some stockholders for their own benefits. Thus, you should know the risk level before you decide on trading in penny stocks.

Find good penny stocks – Do Your Research

If you want to find good penny stocks, you must first research on the penny stocks’ background. Gather a list of available penny stocks and eliminate those that indicate poor performance. It is also a good investment idea to not trade on penny stocks not included in major stock exchanges in the US. Also, choose companies with $10 million and above in their yearly cash. You should also only consider penny stocks of companies whose industries are familiar to you.

Now that you have the best on your list, it’s time to make a good investment decision. First, get the companies that generate cash consistently. Those companies with increased free cash flow over time are considered good penny stocks and are far better than those companies with big debts to revenue. Do a comparison of price per stock against their book worth per share. Do not follow the share cost blindly.

To start investing on good penny stocks, you should first open an account with a broker. You can find a lot of them on the Internet. Many brokers offer different services at an affordable or low commission rate. Just keep in mind to spread your investments in different firms. This way, your risks will be reduced.

Limiting your penny stocks orders will allow you to avoid the big or huge changes in the prices of penny stocks during your order placement. Keep in mind that penny stocks are such a volatile commodity and the prices may have significant difference. Limiting your orders will help you manage this volatility well.

Here are the tips to finding good penny stocks:

1. Follow good penny stocks leads from professionals. You’d only be wasting your time in researching from the scratch. You can get a good penny stocks list from the research of professionals and confirm them through your own research.

2. Penny stocks bought and sold in big volumes are considered good penny stocks because volume of shares is consistently high. Because of this, their rate of return is high.

3. Good penny stocks should have an improved buying and selling history. These stocks should also increase in value even for a short time. As a matter of fact, good penny stocks can give you doubled investment overnight.

4. It is a good idea to consider microcap stock of companies with little competition to those with high competition.

5. Companies with high demand are better.

6. Stocks of companies with any form of illegal or unethical behavior are not considered good penny stocks.
Learn How To Find The Best Penny Stocks To Buy

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