How To Pick Penny Stocks
Want to learn about how to pick penny stocks? Ever wondered what penny stocks are and how to pick them? It's ok there are a lot of investors that have no clue what penny stocks are and how they are strategically picked by traders. This will all be explained in this light but informative article.
- You need to first know what a penny stock is. A penny stock is a stock that trades under five dollars a share. Many times these stocks were once major companies that took a fall in price or they are very new tiny start-up companies. As you can see these stocks are not all that easy to pick, unless you have a lot of years of experience.
- It takes consistent and constant research to be successful. When picking the right penny stock, you will need to constantly stay up to date with the company's place in the market and see how relevant it is becoming or how it's losing interest with Wall Street. Another useful way to pick penny stocks is to see where technology is heading or the trends that are developing in a certain sector. This would have been very big for anyone who saw the coming boom of the Internet in the early 90's or saw the relevance that certain computer companies would have in that same decade and beyond.
- You don't put all your eggs in one basket. Penny stocks can be very volatile, so it is best that you invest a little in a lot of different penny stocks that you have done your research on. It is a good idea to diversify your entire penny stock holdings to protect yourself from any one penny stock from falling.
- Make sure to get second opinions before you choose. There is a great chance that if more than 10 experts on a penny stock say that it will rise in price that it will. But make sure that they are from different areas of media, so that you know for sure that they are not all on the same team.
- Choose a penny stock that gives high dividends. It makes sense to take advantage of this since you are taking a moderate risk in the company. Try to look for penny stocks that pay at least 20% annually a year. The more interest you can get the better.