Beyond the Brink

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Learn the techniques needed to become a successful penny stock trader.
penny stock investing smallcap microcap
Penny stocks represent an excellent investment vehicle for producing gains, while the risks are equally as high. When you finally decide to get involved in penny stocks, to go ‘Beyond the Brink,’ there are some things you need to know.

In fact, whether you have been burned by penny stocks in the past, or have never even invested, the following theories are designed to give you an instant and significant advantage over all those inexperienced and uninformed traders. After all, to make money in stocks someone usually has to be losing money. Which side of the fence do you want to fall on?

Glass Jaw

Lots of people have made lots of money from trading penny stocks. Lots of people have lost plenty, as well. What is the difference between a successful micro-cap trader, and one who continually takes it on the chin?

Uses professional stock picks and research. Does their own due diligence. Observes patience. Takes lessons from past trades and stock activity. Takes lessons from other traders. Decides between 10 stocks at a time.

Uses tips at work, rumors, and so-called ‘inside scoops’ to pick stocks. Doesn’t investigate financials and corporate position. Falls victim to negative emotions like greed, anger, and desperation. Makes the same mistakes more than once. Looks at one stock alone on its own situation.

So Let’s Learn

The fact that you have taken the time to review this feature demonstrates that you have the characteristics of a successful trader, specifically the willingness to learn from experts and the experiences of other traders.
So let’s learn. As mentioned above, you should always examine groups of stocks together when looking for a new issue to invest in. For example, make a chart and write down the revenues of each. In the next column list the earnings. Follow this by each of the subsequent criteria you think are important. With all of the data on one table and available at a glance, you can easily get a clear picture of which are the one or two strongest companies from your pool of potential investments.

However, understand that stock prices do not necessarily act in concert with the underlying fundamentals of a company. For example, there is nothing saying that the stock of the worst company on your list won’t out perform the top ranked one.

For that reason you should also include factors such as trading volatility, your opinion of a potential break-through due to some new product, potential positive press releases, etc… This method is not intended to reveal the best stock, but instead to give you additional clarity about which are the best few and worst few according to your own weighting of the various factors you have chosen.

Available Advantages

Get a discount broker. Monitor your portfolio online, do your research online (and offline), and place your trades online. Embrace the technology, because it provides superior advantages all across the board. You can screen stocks, put those into comparative charts, instantly access the corporate press releases, check the latest industry news, and then place your trade… all for about $20.
Then you can monitor your trade order fulfillment, verify that the money and shares traded hands, track the progress of the stocks, get instant alerts for press releases… It is truly endless and complete, and each step that you take full advantage of leaves other traders one step behind you.

Keep small amounts of money in each stock, and only ‘risk’ money for penny stocks. While these low-priced, volatile investments can produce some truly incredible gains, they usually bounce among all sorts of price ranges.
On a related note, if you get ‘freaked out’ or worried about a stock you hold, you should consider selling your position. Try to invest in solid penny stock companies that have a low share price because they are small or undiscovered, not because they are having business troubles.

Be sure to read our related articles Falling in Hate, Fools Rush In, and Trading Myths, and our tools section on Choosing a Broker.

Beyond… And After That

Some of the most successful traders have a few things in common. Firstly, they have made some major trading mistakes in their day. However, they learned more from these mistakes than they ever did from any of their great trades. Don’t squander your failures by trying to put them behind you.

Secondly, keep a journal with dates, specific trade amounts and prices, and even the stocks you were thinking of investing in but didn’t. You can use this for a hundred different purposes as you become a more advanced trader, such as seeing opportunities you missed, or learning that your strategies are valid, or just to monitor your improvement as you become more experienced from month to month.

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Penny Stocks: Aren’t All Penny Stocks a Scam?

Most Internet e-mail users have been subject to penny stock scams. There are more than fifty billion spam messages sent each day, and many of these mention investing in penny stocks. Spam isn’t a very reliable investment source, right? Does that mean that all penny stocks are, essentially, some sort of scam?

Penny stock scam is a sad fact of using the Internet. It’s possible for people to lose 8% of their investment when falling for these penny stock scams online. Often, these penny stocks do not exist or they do not exist at the advertised price. This type of scam is called a “pump and dump.” Yes, there are some scams on the Internet that center around penny stocks.

This does not mean that all penny stocks are a scam, or even a bad investment. There are some penny stocks that can make investors a good amount of profit, in fact…just not the ones you find advertised in spam. Stopping yourself from investing in those penny stocks is a great idea, but deciding never to invest in penny stocks of any kinds because of that may not be.

Yes, there are considered a high-risk investment, but it’s also possible to turn a pretty profit by using penny stocks. In most cases, there is a certain finesse needed to invest in these stocks, as they rarely trade and sometimes things happen with penny stocks very quickly. Investors have to know what’s happening all the time and be ready to make a move when needed – making penny stocks somewhat exciting and interesting to trade in. This is why some investors like them.

Don’t let Internet scams scare you away. There are a lot of Internet job scams, too, where so-called “employers” offer to pay you lots of money to do something simple like answer surveys or surf the “Net. In many cases, these “job offers” turn out to be nothing but an Internet scam, and a clever ploy to try and get your hard-earned money. But you don’t let Internet job scams keep you from working – so don’t let Internet penny stock scams keep you from investing. That still means that the scam artists win, because they’re keeping you away from something.

To learn which penny stocks are potentially good investments and which are potentially bad, there’s lots you can do. Check the business journals and stock information, or ask a broker for more information and advice regarding penny stocks. There are good penny stocks out there, and there are investments out there where you can make a lot of money. By doing your research and looking into every possibility, you increase your chances of success in the stock market. And isn’t success what it’s all about?

If you’re interested in investing in penny stocks, you can’t let anything (even scams) stop you. Do what you want to do and invest your money where you think it’s best. After all, it’s your money and only you can decide what you want to do with it. Make the choice for you, not for any other reason.

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