We?ve all gotten our share of penny stock advice over the years: From family, friends, co-workers, even that wild eyed guy you met at the grocery store late one night. And while you could dismiss much of it, there may have been a few good penny stock picks in there to jump on. But overall, in order to make money with penny stocks ? or any type of stock ? you need to follow common strategies to help ensure your success.
1. A good piece of stock advice is to read the disclaimers, and remain on the cynical side for your own benefit. Take the case of social media. Just because it?s the hottest thing on the Internet now, that doesn?t mean you?ll be able to glean top penny stocks from the first Facebook ?like? you receive, or from your 1,000th follower on Twitter. Remember, you?ll never see stock specific disclaimers on any of these sites.
2. If you want to make money with penny stocks, then pay attention to the world around you. Sharp investors know that factors like political change, social unrest, and natural catastrophe can affect how a stock performs. Follow Europe, China, and the Middle East ? three veritable hotbeds for events that can make or break the stock market.
3. Figure out your goals and objectives, and keep them on paper or add them to a simple computer spreadsheet. This is another good way to make money in the stock market. Grill yourself with questions when you?re getting ready to buy stock: Am I ready? Do I have enough money? How much can I afford to lose? Will I have enough sense to get out if the stock begins to tank?
4. Diversify, and don?t fall in love with one kind of stock. Yes, you can make huge profits with penny stocks under the right circumstances, but we?re a firm believer in spreading around your investment dollars for your own safety. Spread your investments between real estate, bonds,stocks, cash, and never put more than 10 to 15 percent in one company.
5. Watch for indicators of profitability. While a young company may run at a loss, don?t dismiss an investment opportunity until you know the cause of a loss, and whether it?s manageable. Will the value of your shares be diluted if the company needs another round of financing? Is the company on the verge of a product or market breakthrough? A good piece of advice is to watch industry news, and for events where company representatives may be speaking. You can glean good tips this way.
6. Look for a company that?s figured out a way to end a performance gap. A performance gap refers to a problem for consumers or investors that companies in a particular industry cannot solve. This means that a company that comes up with a creative solution could see a spike in share prices and profits for investors.
Keen investors ? whether beginners or seasoned veterans ? have their own strategies to help them succeed, but if you follow even the most basic concepts, you?ll be in a better position in the long run to turn a profit.
Source: http://www.realyard.com/2012/07/penny-stock-strategies.html
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