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Penny Stocks: What Are The Characteristics Of The Best Ones?

There is no doubt that people have heard of penny stocks, but the fact remains that not everyone is joining the bandwagon of trading these options. Before you get into penny stock trading, here are different things that you should know about this stock trading secret. Use these tips in choosing the most profitable penny stocks in the market.

Most of the time, people choose to invest in this type of stocks in a price per share basis. However, not every stock has the same price, and not all of them will gain the same amount of profit. Since the Securities and Exchange Commission has established a $5 minimum price for stock trading, it is best to stick to the ones whose threshold prices are not higher than that minimum price. Make sure that you stick to stocks that have a per share value of $5 or lower, because they are the ones that have the chance for the highest amount of gain. Hadn’t we all wished we had invested in Microsoft?

One of the methods I personally use is diligent research. I receive a tip then take the time to expound on the information. First I check other market reports to see if they have the same recommended stock pick and read the reasons behind it. Next I proceed to check the company’s background including, but not limited to:

1. Years in business

2. How much debt they are carrying

3. Any recently signed contracts

4. Their liabilities

5. Future proposals

6. Year high and lows

7. The CEO’s credentials

While it using the techniques above will be able to help you decide which stocks will fall under the criteria you have predetermined for your trading strategy. You will need to change your tactics regularly as far as the buying and selling itself is concerned. This is mainly because the market changes frequently, thereby leading all these characteristics to change as well. The safest thing to do is to alternate between the techniques above while, of course, using the most up to date indicators and values.

If one wants to make trading pennies a long-time career, then enlist the help of a good trader in formulating your own trading technique. Doing this will help to ensure that your investment plan will suit your skills and your trading style. Just make sure that you update your technique regularly, to ensure that it will still work for the current state of the penny stock market.

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