Do you want to trade with penny stock and do not know where to start? Do you how you can maximize your profits from trading with your penny stocks? If you are searching for tips to help you succeed in your penny stocks, then you have come to the right place. Penny stocks are low-priced shares that are floated by small companies as a way of raising their capital. However, are people able to make the wise decisions to invest in penny stocks? Below are some tips to investing in penny stocks that every investor must know.
Investing In Penny Stocks
Make use of basic stock screener
Instead of checking penny stocks information on forum boards, investors are highly encouraged to use an automated screener to check their preferred stock with ease. There are various automatic screener’s that are available in the market including; Bing finance and OTC markets. The screener will help you select penny stocks based on the following;
• Book value
• Revenue, growth
• Cash flows
Check on the Liquidity
There are penny stocks that will trade in hundreds while others in thousands per day. To get a clear liquidity view of a company you are supposed to multiply the number of shares traded by the price of each share in a given day. Penny stocks with lower liquidity are likely to be very volatile. When investing in penny stocks, it is always advisable to select the one with a higher liquidity and a fair price.
Keep all trading records in a journal
As a starter, having a trading journal is one of the very important assets that you might have at your disposal. The journal keeps records about the various moves made and whether loss or profit was made. This information about how you performed in the past will likely help you to become a more proficient trader in the future.
Volume of the penny stocks floated in a day
It is always advisable to check on the number of shares of a particular company that is traded on a given day. Click here to see the list. This reflects on how the cash flow within a given business is. A company with a low shares transfer rate of penny stock is very risky.
Finally, it is important also to read and understand the disclaimer information. With the above tips and investor can be able to trade in Penny Stocks.