How You Can Make Money From Penny Stocks
Trading penny stocks have gained in popularity and momentum over the past couple of years. Partly because of the low entry point and the opportunity to turn small sums of money into huge profits.
More and more risk strategies and money management ideas are now available to all penny stock traders which can provide opportunities to safely make money with penny stocks that where not accessable to the masses during the early days when the popularity of penny stocks first began.
Experienced investors are making huge profits with penny stocks year after year. However the majority of would be penny stock investors lose money, mainly because they are not smart enought to learn the effective penny stock investing systmes from experienced mentors.
Can You Really Make Money Safely With Penny Stocks?
Of course, but as we said previouisly, most people won’t. Trading penny stocks is much different than trading large cap stocks on the New York Stock Exchange. If you want to make serious money with penny stock it is important to learn all you can from an experienced penny stock mentor before you jump in the water.
What Are Penny Stocks?
The definition of a penny stock can differ from investor to investor, and penny stock brokerage house to penny stock brokerage house. In general they are stocks trading for less than five dollars per share. Some penny stocks can dip down to even a fraction of a penny. In general when investors are talking about penny stocks they are talking about stocks that trade for less than a dollar. Even though the price is lower the amount of trading volume with penny stocks is much lower than most higher priced shares.
You won’t find penny stocks on the NASDAQ or NEW YORK STOCK EXCHANGE Penny Stocks are traded (OTC), over-the-counter on what’s commonly called the pink sheets. These shares are often very risky, though if you find the right penny stock mentor who trades full time they can help you find the hidden gems that are ready to break out.
Penny stocks are risky because many of the companies are start ups, some are shady, and may are plain and simply frauds and what is commonly called pump-and-dump scams. Today, even the masses understand the concept of pump-and-dump where paid hype artist promote a stock to get the price to rise and then insider sell off at a higher price. The hollywood hit the Wolf of Wall Street revealed this scam to movie goers around the world.
The (SEC) Secruities and Exchange Commission doesn’t require the normal financial disclosure that are required by companies that trade on major exchanges Companies behind penny stock normally aren’t as transparent. So it takes some digging and a ton of research by a penny stock investor that knows what they are doing to weed through and find the small, legit companies who have huge upside potential.
So when you add up all these risk factors many investors choose to avoid penny stocks, and in so doing can miss out on stocks that create quick gains to the moon. An example of a solid, penny stock everyone in the know could have gotten in on is Affiliate Metals.
The Best Way to Find Safe Winning Penny Stock Picks
I guess it just makes sense the challenge for those entering the penny stock market is finding a winning penny stock pick. Many people treat picking penny stocks like they are throwing darts at a board to see what lands. Honetly when I got started in penny stocks my strategy wasn’t that much different.
I was quickly on my way to one of the 70% who lose money with their own penny stock picks. That was until I found Matt, my micro-cap mentor.
Finding undervalued penny stocks that have huge growth potential can be very hard for newbies starting out. Traditional stock investors don’t have the patience and the research abilities needed. It takes new penny stock investors a while to develop the unique skill needed to create safe penny stock investments. In my opinion you simply have to find help from a full-time penny stock investors.
The right penny stock mentor will find the undervalued stock that has a positive valuation, strong financials, and a promising future outlook and share their picks with you.
If the company is expected to turnaround, a trader will hold onto shares to realize the gains. The lower volueme of liquid shares makes these shares sometimes more difficult for you to buy.
After you have bought the “potentially” lucrative stock, you will need to ensure that you can turn around and sell it quickly after you have experienced the desire gains you where looking for.
You can always hold the stock and take a chance on it one day selling for a profit, but remember there is a reason you got the penny stock for a bargain, if it’s not hot right now, it can take longer to liquidate.
For most of my penny stock trades I have a very simple 3 Step System.
1) I depend upon, Matt, to do all the research and find the potential winners. Honestly this is the missing piece for most penny stock investors.
2) Let’s say I buy in with with 5,000 shares at 10 cents each for a total of $500. I immediately put in a sale order to sell
2,500 shares when the price reaches 20 cents. I now have my original investment back and am playing with house money with my remaining 2,500 shares.
Now I have options. I would normally share 500 more shares when the price goes to 25 cents and take profits, but still have 2000 shares, and hoping this solid company goes on a big run, which is Matt’s philosphy when he picked the stock.
I have had 10 cent stocks run up to $9.00 in less than a year,
so yes that simple system is the reason I am now a full-time penny stock investor.
What Are Key Signals of Good Penny Stocks?
In investing we tend to call ourselves glorified history teachers because we are constantly looking into the past.
We are doing that to try and estimate where stocks will move in the future.
It’s not perfect, but history usually repeats itself. Honestly, I don’t spend too much time at all trying to pick stocks anymore, but when I get the recomendations from Matt, I do research to try to see how he came up with that pick. I can usually follow the logic, but I do not have the resources to do the deep research that his team has available.
So we all need to learn how to read chart patterns and more importantly, how to learn to understand what the charts are really revealing to us to make consistent, safe, money with penny stocks.
This comes with time and practice just like everything else in life, which is why I study every recommendation I receive. I have learned to look at all the key indicators from the best to get a picture of how the stock will perform in the futre.
What Make Penny Stocks So Risky for most?
As we have already stated, multiple times, they don’t get good information from a full-time penny stock investor.
Penny stocks are good for the free enterprise system because they provide a legit business with ways to get access for funding from investors. We have all heard that some companies go out of business because they are growing to fast, and keep keep up with the demand for their products. The cash flow from the sell of their stock enables them to have rapid growth instead of going out of business in some situations.
There is no question that the risk with these companies are larger than with blue-chip companies. However so are the profits. It is much easier to double your money with a 10 cent stock than it is a $100 stock in most cases.
Many blue-chip stocks are backed by companies that sell quality, widely accepted products and services. Many are household names. You probably will have never heard of most penny stocks unless their headquarters are in your local area.
Blue-chip companies generally have a track record of weathering downturns and operating a profit in the face of adverse economic/pandemic conditions. I do have many long-term investments in Blue Chip companies. I invest in these companies from the profits I earn from my penny stock invesments. I still look for Blue Chip Companies that have huge upside potential. I normally am buying stocks in the $30 – $50 per share price instead of my normal 25 cents or less target. I get all of my blue-chip picks from one source: The Wallstreet Window.
How to Minimize Risk Trading Penny Stocks?
I feel by nature, I am a thrill seeker. However that is not a good personality type to have if you want to make money with Penny Stocks. If we are honest, the Penny Stock market attracts thrill seekers. It took me awhile to learn to get advice from the right person and develop an investor mindset.
Today I have become an investor that hates risk to the point that I’m willing to do anything possible to avoid it!
If you take large risks in the stock market, you will stand a higher risk to lose a lot of money. In a few cases, you could lose more than you invested especially in the Forex market. Yes, I trade in the Forex market, actually I don’t I actually have access to a computer that makes all my winning Forex trades.
If you want to be a successful trader, it is really not that difficult if you just accept the fact that there are many smart people that know more about it more than you. Follow their systems. Focus on the rules, diciplines, and exactly how to eliminate or drastically reduce your losses and practice risk management. Take the knowledge available to you, and put it into action!
Alternatives To Penny Stocks
Thanks to the growth of fractional shares, you can usually invest in stocks even when their prices are high. For example, if the reason you won’t invest in a company like Shopify (SHOP) NYSE is due to the fact that a single share costs approximately $1,034 dollars at the time of this write. However you can now buy a portion of a single share and still benefit from future growth in the share price.
Are Penny Stocks Worth It?
There are a lot of good reasons to invest in penny stocks, and we have tried to share them with you here. Investors who are able to find high growth companies when there share price is still small have a potential for large investment gains than those who wait until those companies have grown into giants in the market and cash out for six or seven figures.
However, to be successful in investing in penny stocks or blue-chips you must ensure that you are performing your research and due diligence on the companies you are thinking of purchasing. I decided to skp this step and simply rely on proven, reliable, advisors.
Because the companies share are cheap doesn’t mean they are valuable. Many penny stocks are traded so cheaply because the company behind them are not worth the paper the shares are printed on.
In closing, can you make money investing in penny stocks? Yes, you can, but please ensure that you have performed the necessary research to make your penny stock purchase a profitable one. Investing in the right companies with predictable upside possibilities is the answer. You need a research team on your side that can see through all the smoke and mirros that many of these companies are master at propigating throught the markets.