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Basics of trading penny stocks?

Basics of trading penny stocks?

Postby ame » Fri May 17, 2013 11:37 am

i want to start trading penny stocks, but i want to know some basics about it like should i open a banking account separate from my checking, how much should i start off with, and any good tips for beginners?im 21 yrs old working full time but i want to start earning income apart from my job. thanks! anything will help
ame
 
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Basics of trading penny stocks?

Postby kendon » Fri May 17, 2013 11:52 am

When you invest/trade in penny stock you should never put up more than you can afford to loose and you should assume you will loose it all. Unlike regular securities, penny stocks do not let you use risk cutting procedures (options and/or stop orders) since most are not traded in a regulated market place. Since there no requirement on market makers in the OTC Market it may be difficult to find a buyer when selling is required.

They say when you buy securities you have a 50%-50% chance of making money, when you buy penny stocks you have a 50-50-90% chance, 50-50 chance of making money and a 90% chance of loosing money. Since there are no meaningful regulations for trading only those with trading experience stand a chance of being successful trading in penny stocks. Penny stocks are not for newbies.

When buying penny stocks, like any other security investment, you never invest 100% of you investing capital. Penny stocks are fun to trade, but you should never count on them to be considered part of your primary investment objectives. One should not trade penny stock unless they have several years experience trading regular securities.

And before you enter an order for penny stock, read what the SEC has published regarding penny stocks http://www.sec.gov/investor/pubs/microca…

All that said, here are some websites that you will find helpful
http://www.smallcapinvestor.com/
http://www.stockwire.com/
http://www.otcstockexchange.com/
http://www.pennystocks.com/
http://www.pennystockalley.com/
http://www.pennystockwizard.com/
http://www.awesomepennystocks.com
http://www.preferredpennystocks.com/

If you really want to start earning income, the penny stock market is the last place you should try.
Penny stocks ARE NOT for newbies. Only those with trading experience should consider trading in pennies since they understand the market, the risk and the problems associated with penny stocks.

Those with securities experience will tell you that you are foolish to start in the market by using penny stocks and those that are in business will tell you not to do it.
So with experienced investors/traders telling you not to do it, and those that are professional tell you not to do it, and even the Securities & Exchange will not recommend you do it, why do you think you can make any money.

Before you enter an order for penny stock, read what the SEC has published regarding penny stocks http://www.sec.gov/investor/pubs/microca…
kendon
 
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Basics of trading penny stocks?

Postby orick » Fri May 17, 2013 12:04 pm

Glad you asked. Here are the basics: 1. Put money in penny stocks. 2. Lose money in penny stocks.

It's a pump and dump scam. The pump part comes by getting everyone excited about a company that is nothing but words on paper. Then everyone buys the penny stock and up goes the price. But the only people selling the stock are the scammers blowing hot air about a paper-nothing company. The scammers also hold onto a large block of shares. The dump part comes when the scammers sell all their shares and down goes the price and you lose all your money. Nobody will buy your shares because there are no longer any buyers.

Then the scammers laugh at you and count their money. The next day they come back and make up another paper-nothing company and do it all over again.
orick
 
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Basics of trading penny stocks?

Postby rorry94 » Fri May 17, 2013 12:54 pm

Investing in penny stocks is not for the newbie. It is possible to make money in such investments but only an experienced investor will be able to properly evaluate the good from the bad and ugly.

If your object is to earn an income apart from your normal income then start with more stable stocks first....then as you learn how to research stocks properly (4-5 years of study) then you might try a couple of pennies.
rorry94
 
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Basics of trading penny stocks?

Postby stew » Fri May 17, 2013 1:14 pm

To add to these previous truthful and accurate posts - Making money in penny stocks honestly is probably not possible. Almost all penny stocks (and the definition here I would use is not the $60 stock that falls to $4 but something like a stock that is under $1) are just scams for unsophisticated people. I am sure that I couldn't make money tradng penny stocks honestly and I know an absolute ton about trading and equity. Your chances are nil.
stew
 
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Basics of trading penny stocks?

Postby fitzpatrick » Fri May 17, 2013 1:26 pm

most penny stocks are basically pump and dump scams. Go to www.pumpsanddumps.com
and they alert you to penny stock scams that are out there. Here is what usually happens.
lets say the touts (awesomepennystocks.com etc) will decide to start touting a stock such as potg nsrs etc. then they make their "pick" and promote it heavily for a month or so - then the price runs up - and then it will near the end of life for the scam and then they take their profits and then the price falls sharply back to what it started at which is almost nothing because most of these penny stocks have little to no value. If you understand that this is not a long term situation and that it is basically gambling and if you get in at the very beginning and then get out quickly you can probably make some money - but this is a high degree of risk. This isn't investing - and it is speculating or gambling. It sounds like you need to start with a basic program like Dave Ramsey's financial management program where step one - you put away $1000 in cash first. second you save 8-12 months of your pay in case you lose your job or something. Then make sure your debts are paid. Then start building income based investments so that you can eventually live off the dividends and perhaps consider owning a home. then if you are doing well then you can focus on growth investments and only then should you consider more speculative investments. And then after that you should consider giving to charitable causes after your needs, retirement, family, home are taken care of. These penny stock scams take advantage of a lot of people.
be careful - the SEC hasn't done anything to stop these people, and basically can't -because they are based outside of the United States. Don't believe anything you read in these penny stock touts because they are lies. They lie to people all the time. They tell people that the stock went down because of shorts or whatever - no that isn't why it went down - it went down because the insiders bailed out and because the scam was over. Go to the pump and dumps web site for any stock pick you are considering and most likely it will be on their list. All these that are listed there are scams.
most penny stocks are scams. They are the riskiest of all stocks.
fitzpatrick
 
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Basics of trading penny stocks?

Postby heath15 » Fri May 17, 2013 1:35 pm

The Basics are: Number One - Stay FAR, FAR away from them. You will lose your shirt in the end.
And if you want to start earning income, then stocks are not the right choice for you or any beginner anyways. Look at some bond funds like Investor Grade Corporate or High Yield Corporate. Lately yields
are not as good as before but they are fairly reliable.
heath15
 
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Basics of trading penny stocks?

Postby wymer » Fri May 17, 2013 1:53 pm

Here are the basics on trading penny stocks:
1. Invest money in a series of penny stocks
2. Loose that same money when you can't find a buyer or can only sell them for a fraction of what you paid.

That's all there is to it.

Repat to yourself. "Penney stocks are a SCAM"
wymer
 
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Basics of trading penny stocks?

Postby marland66 » Fri May 17, 2013 2:15 pm

Investing in penny stocks is a losing proposition. Penny stocks are cheap for a reason. Don't get involved in those.
marland66
 
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Basics of trading penny stocks?

Postby stefano » Fri May 17, 2013 2:23 pm

Very high risk to trade in penny stock because all penny stock is very volatile.
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