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Penny Stock Trading Perspectives

Updated on May 7, 2012

The stock market presents a challenge to most people that like to dabble in it. There are ones who have learned so much about trading in only one category that changing categories would be outside their comfort zone. But, sometimes to be able to make the most of opportunities presented to you stepping out of your comfort zone is where you have a chance to make some extra money. Penny stock trading is a riskier alternative, but if done correctly the returns can be accomplished.

The internet is saturated with ads claiming the penny stock market will make you a millionaire. There are committed affiliates pushing the latest EBooks, Software, or prediction tool that will help you make millions. Well, sorry to say most of these are places that you are just going to purchase and then have no money to invest in the penny market. So, let’s take a look at the basics of penny stocks and see where you can still make money without throwing your money away on empty promises.

1. Research

In any trading investment the more knowledge you have on a subject the better. So, if you have never traded penny stocks read about them. Read about the negative read about the positive and then read some more. The more you know what penny stocks are and how they function in the market the more you will understand how to trade penny stocks.

2. Company information:

Although, not as easy to come by when you are trading on the pink sheets or the OTC exchanges it is there. Companies that trade on these exchanges are not held to the strict reporting structure of the NASDAQ or the NYSE. So, when searching for company information, it is extremely critical that you find out everything you can. Financials, merits, people who work for them. Debt to income ratios, location of company etc. If the company is in the middle of the saran desert, it’s probably a scam so run.

3. Join with like minded individuals.

One of the best places of information is in two areas. Penny stock market reporting websites and with like minded individuals. There are tons of places all over the internet where people get together and trade information on their stock picks, strategies, and other resources. Join these groups and get involved, ask questions, get the networking going. Because, you will learn a lot from people who have been doing it longer than you have. Of course\, not everything can be believed in a forum so also due your diligence and make sure you are getting information from a reliable source and not a “pumper”

If, you take your time to learn the basics of trading in these markets you will be much more successful from your exact first trade. Now there is no guarantee that you will not lose money\, but it is less likely you will if you take the time to be self educated.

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