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Penny Stock Secrets Revealed

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Penny Stock Secrets That Every Trader Should Know

Penny Stock SecretsThere is no reason to trade penny stocks without knowing the penny stock secrets that keep savvy penny stock traders ahead of the penny stock trading game.  There is a reason why some penny stock traders excel over other traders, because they know penny stock secrets that help them avoid pitfalls in the penny stock market.

The first of many penny stock secrets that penny stock traders need to understand is that the owners of penny stock companies almost always hold all of the cards in the game.  The company owners (insiders) almost always own enough penny stock shares to have a controlling interest in a penny stock, so they can call the shots and manipulate outcomes to benefit themselves, sometimes to the detriment of other holders of a penny stock.  This is done by Board of Directors votes, which they control since they control the majority of penny stock shares.

One of the penny stock secrets that is related to insider control of penny stock companies is the fact that penny stock companies can, via Board of Directors votes, issue additional penny stock shares as they please and sell them to the market; diluting existing penny stock holder’s ownership in a penny stock company.  In some cases, dilution of penny stock shares becomes so great that the Board of Directors votes to enact a reverse split of shares, which means existing penny stock holders lose a tremendous amount of value in their penny stock holdings.  These reverse splits are usually accompanied by a name and symbol change.  One of the wise penny stock secrets is to take a look at the history of a penny stock you are considering putting money into to see if the company or company insiders have a history of issuing shares and enacting reverse splits.

Knowing Penny Stock Secrets Will Make You a Better Trader

Another of the many penny stock secrets that all penny stock traders should know to make them better traders is that just because a penny stock company is Security and Exchange Commission (SEC)-compliant, it does not mean that you can let your guard down.  The SEC is overwhelmed with the number of securities that it oversees.  There have been companies that have issued blatantly false press releases (PRs) that caused their penny stock shares to soar and eventually crash, even while being SEC-compliant.

The most important of all penny stock secrets is to tread lightly in the penny stock market and take profits when they are available.  Yes there are some diamonds in the rough in the penny stock market that return 1,000s and even 10,000s of percent gains for those who hold the huge penny stock gainers long.  This is what keeps so many traders in the penny stock game.  However, these gains are the exception rather than the rule.  If you are lucky enough to be a holder of a penny stock that gains 1,000s to 10,000s of percent, take your profits and be happy.  Penny stocks often go down over time after a big run up, as momentum fades and penny stock traders look for other trading opportunities.

Keep these penny stock secrets in mind as you trade penny stocks, as they will help you avoid the downside of penny stock trading.

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