January 30, 2017 / by Symbian23 / Business / No Comments

2 Essential Strategies for Trading Penny Stocks

penny stocks to watch can be quite rewarding. Their low cost (less than 5 dollars/share) means that an increase of only a few dollars in cost will mean a large percent gain. Also, since they can be not expensive to buy, they are able to be perfect for investors with accounts that are small. But as with all trading, penny stocks can be quite high-risk. They have been notoriously high risk because they signify small or startup companies that do not have a substantial market share. So, it’s significant to understand how to pick the correct stock. This post will discuss two strategies that are vital.

First, you need to find a way to locate companies that show growth potential. With penny stocks, the word that is key is research! Read up on the company and read the news about the company. Locate a company that’s a leader within their area. Next, you need to keep a sharp eye for anything in the news that could indicate a huge move by the company. For example, if a mining company is getting prepared to sign a deal to buy a potentially loaded piece of land. That’s great news if the mining company locates an enormous new source of whatever they have been mining and the stock price will largely probably shoot up. You need to look out for these nuggets of good news and get ready before it makes the huge jump to buy a penny stocks to watch. Do not be selfish, particularly with penny stocks since they can fluctuate a lot. Say 200% if the penny stock soars, sell it and bag the gain. Do not hold, hoping for larger increases. So that 200% increase could vanish within hours Penny stocks fluctuate a lot.

Next, you need to look at how sound the stock is. Price-to- P-E, or Earnings Ratio, is the cost of a share divided by the earnings per share of the stock. It’s a great index of how the stock that is precious is to investors.

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