Posted on 19 October 2011.
Making penny stock picks is not easy. There are multitudes of these stocks and choosing the right one can feel like trying to find a needle in a haystack. However, some helpful wisdom can narrow down your choices and make your chances of success much higher.
You should discard all the penny stocks that do not offer useful financial information about the companies behind them. This lack of information suggests that they are either hiding something or are too incompetent to provide important financial data to the world. Either reason behind such actions is bad news for an investor.
Do not believe all the hype about a popular penny stock. Make your penny stock picks based on your own research. Popularity in a stock is rarely based on good data about fundamentals. It is more likely based on human whims and emotion. Neither of these is useful for making money.
Disregard stocks that no one is trading. Many penny stock traders dream of buying that hidden stock that no one else knows about and watching its value soar. However, that scenario is a dream because there are thousands of traders out there and many of them are very intelligent. If a stock has potential, traders will buy and sell it moderately well.
Choose from the remaining penny stock picks by vigorously researching and comparing the candidates with the clearest financial reports that also trade fairly well. Once you have bought into a penny stock you will have a new dilemma before you. Now you must decide how long to hold it. Some penny stocks should be bought and sold on the same day. Other penny stock picks merit being retained for some time so that they can give you a decent return.
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