| Investing can be a tricky game of big wins and big | | | | appeal to you after doing the research hold cash. It's |
| losses. Controlling your emotions and money | | | | better than investing in a mediocre company that |
| management are essential in any investing regiment. | | | | doesn't interest you. You'll save heartache and also |
| However, investing in penny stocks can add even | | | | have the cash on hand to invest when your ideal |
| more elements to recognize in yourself, your trading | | | | investment comes along. |
| patterns, and the companies you are purchasing. If | | | | 5. Watch The Hype Machine. There are many penny |
| you have any rules that you use please feel free to | | | | stock newsletters out there that are promoting |
| leave a comment for inclusion on an extend list. | | | | stocks for moves higher based mostly on their |
| 10. Research The Management. Probably more | | | | promotion campaign. Sometimes it's valid, but |
| important than the earnings of penny stock | | | | sometimes the companies are barely a legal entity. |
| companies since many of them will be burning money | | | | So feel free to invest in these stocks but don't trust |
| (operating in a loss) until they go into production, or | | | | anything you read on them. Do all the work yourself |
| otherwise are in a highly leveraged growth strategy. | | | | to see if the hype matches up to the reality, and be |
| Their balance sheet, and cash flow statements may | | | | very careful of gap opens and rapid sell offs. Tread |
| not look as good as some of the large cap stocks, | | | | lightly or not at all. |
| but they have value to offer through sound | | | | 4. Be Volume Conscious. Be conscious of the number |
| management with experience who can lead them to | | | | of shares trading hands everyday. This can drastically |
| the next level. | | | | affect whether or not you can actually buy or sell |
| 9. Research The Cycle. Many stocks have periods of | | | | shares. Having a large volume will help you enter and |
| large price appreciation and decline. If you can spot | | | | exit your positions more easily. Look for average |
| the cycle, trade it and profit. | | | | volumes over multiple days, as a single day of heavy |
| 8. Don't Invest What You Can't Afford To Lose. | | | | trading could be the result of a large buyer/seller. |
| Penny Stocks are exceptionally risky. If you don't | | | | 3. The Big "D" And I Don't Mean Dallas. Diversification. |
| mind looking a statement that turns to $0 then | | | | A simple concept whereby you don't put all of your |
| maybe it's not the best market for you to be in. But | | | | eggs in one basket, stock, or industry. |
| the rewards are exceptional for the brave and | | | | 2. If You Chase A Bull You Might Get Trampled. If a |
| knowledgeable. Doing your research could prove to | | | | price has exceeded where you wanted to enter, |
| result in 100%+ gains. | | | | don't chase it up. The profits have likely been made |
| 7. Know Your Exit Strategy Before You Enter. | | | | and it's time to focus on new stock opportunities. |
| Whether you expect a stock to double in price, sell | | | | 1. Place Limit Orders. Don't get killed by bid/ask price |
| out to a competitor, or start paying you a dividend | | | | spread. If volumes aren't large enough sometimes the |
| know why you're buying the stock and recognize the | | | | spread between the bid price and ask price can be |
| time when you've reached your goal and exit the | | | | quite large. If this is the case it will eat in to your |
| position. Also, know when you plan to cut your | | | | profit by the difference in the spread if buying the |
| losses before you enter the position. This is usually a | | | | ask and selling to the bid. Be sure to place the limit |
| more difficult mental commitment to make. | | | | orders to avoid getting killed on the spread. |
| 6. Don't Fear Cash. If there aren't any stocks that | | | | |