In the Arab world as elsewhere, stock markets mirror the economy as a whole. When Wall Street falls, Americans feel poorer, with often-serious implications for the rest of the economy; rising shares on the other hand make people feel … Read More…
In the Arab world as elsewhere, stock markets mirror the economy as a whole. When Wall Street falls, Americans feel poorer, with often-serious implications for the rest of the economy; rising shares on the other hand make people feel …
In past articles I have touched upon how to play a penny stock or micro cap stock near its bottom. You will come across a lot of stocks at or near their bottoms when trading penny stocks, here are some tips for timing your purchase correctly.
Once you have found a stock you like, take a look at its 52-week high and its 52-week low. This will give you the stock’s trading range for the year. When a stock is trading near its 52-week low it has a better chance of moving upward in the trading range. When at a 52-week high, some traders may feel its to risky to purchase and will wait until there is a retrace in price. This is a general rule for the majority of penny stocks that trade within a range. There are some obvious exceptions, such as great news causing a penny stock to continually make new 52-week highs.
When a stock you like is near or at its 52-week low, you must investigate why. Search for any S-8’s, SB-2’s, or an increase in the amount of operating shares. These filings are dilution, the company will have added shares to the market causing an increase in supply and a price drop. If these filings are not present and there is no reason for the stock to have dropped this low, then it may be a good time to invest.
You should have a good reason why you like the stock before purchasing. Some major things to keep an eye on are stocks in very strong markets. Currently gold and oil stocks are strong, therefore finding undervalued gold and oil penny stocks is a good idea. Another of my favorites is finding a penny stock with an innovative product, these types of products can garner national media attention and often will draw the interest of other big companies in that field.
Ideally, you want to find a company that has increasing revenues and a lot of valuable assets. These types of companies are hard to find and you must investigate thoroughly. Often you must assume they will generate revenues in the future. Look at the amount of shares the insiders are holding: is there a small float with a large amount of insider ownership? This would be a sign that the insiders think that their shares will be very valuable in the future. At times you will also find that institutions are holding a percentage of shares, which would also be a good sign.
Using a stock screener you will be able to generate lists of stocks with institutional holders, insider buying, small floats, and strong revenues. After you generate these lists, separate them by their fields, such as technology, oil, or gold. Find the companies that interest you most in the strongest of fields and begin to read the filings. You will be able to dismiss some companies almost immediately. Keep narrowing down your search until you have a handful of companies into which you are willing to invest your hard earned money.
If you have done your research correctly, the company should continue to grow in value and in time other investors will realize the potential and the price of the stock will continue to rise.
About the author: Keith Guyette M.Ed, J.D. is a professional trader as well as the owner and head stock analyst for www.bottompicks.com. Mr. Guyette is also the moderator at one of the largest stock bulletin boards on the web.
You need to consider some basics before you enter the world of investing in stocks. The main reason: the stock market is a field dominated by savvy investors, who know the ins and outs of making profitable trades. For people who are not on the inside, Wall Street can be a very dangerous place. Here are a few tips that can help you in your beginning stages:
1) Don’t even consider “tips” that tell you about “hot stocks”. Consider the source: if you had a huge, cannot miss, money making investment tip, would you offer it the world at large, free of charge? You wouldn’t, and neither would anyone else. If someone is touting a can’t miss stock, they most likely have a financial interest in seeing the stock rise. Conversely, if they are rooting for the stock to miss, you can almost rest assured that have “shorted” the issue.
2) Always do your due dilligence. You’ll hear this advice over and over again, and that’s because it’s extremely important and bears repeating. You must always do your own due dilligence. Relying on the advice of others, no matter how well intentioned it may be, is almost always a recipe for disaster. Make sure you dig in and really examine the public numbers and financial releases from companies. Nothing tells the story more clearly than the numbers. Ignore basic touting techniques like press releases which have very little substance, and rely instead on hype to tell the company’s story.
3) Only invest money you can afford to lose. Sure this is a basic point, but tons of people miss it. You should only invest money that you can honestly afford to lose, and without any tears, if the worst case scenario comes to fruition. Everyone enters into investments with the right idea of earning big profits, but in many cases, this never pans out. If you lose your rent money, you can rest assured that your days of dabbling in the stock market will come to a very quick and bitter end. ut asides small amounts of money each week from your paycheck for savings and investment and use that.
The learning curve for investing in stocks can be steep, but in the final analysis is well worth it. In no other endeavor can you make the types of returns that are associated with the world’s greatest stock investors. But make sure to take your time, and keep detailed records of all of your transactions, with particular attention being paid to what you were thinking when you made the trade. Over time, this record will become an invaluable instrument for helping you determine what type of trade makes you the most money, and it will also give you insights into your character as a trader. There’s plenty more to learn, of course, but hopefully these basic ideas will help you on your stock investing journey. Good luck.
Please visit the Stock Market Forum for more information on the Stock Market
You need to consider some basics before you enter the world of investing in stocks. The main reason: the stock market is a field dominated by savvy investors, who know the ins and outs of making profitable trades. For people who are not on the inside, Wall Street can be a very dangerous place. Here are a few tips that can help you in your beginning stages:
1) Don’t even consider “tips” that tell you about “hot stocks”. Consider the source: if you had a huge, cannot miss, money making investment tip, would you offer it the world at large, free of charge? You wouldn’t, and neither would anyone else. If someone is touting a can’t miss stock, they most likely have a financial interest in seeing the stock rise. Conversely, if they are rooting for the stock to miss, you can almost rest assured that have “shorted” the issue.
2) Always do your due dilligence. You’ll hear this advice over and over again, and that’s because it’s extremely important and bears repeating. You must always do your own due dilligence. Relying on the advice of others, no matter how well intentioned it may be, is almost always a recipe for disaster. Make sure you dig in and really examine the public numbers and financial releases from companies. Nothing tells the story more clearly than the numbers. Ignore basic touting techniques like press releases which have very little substance, and rely instead on hype to tell the company’s story.
3) Only invest money you can afford to lose. Sure this is a basic point, but tons of people miss it. You should only invest money that you can honestly afford to lose, and without any tears, if the worst case scenario comes to fruition. Everyone enters into investments with the right idea of earning big profits, but in many cases, this never pans out. If you lose your rent money, you can rest assured that your days of dabbling in the stock market will come to a very quick and bitter end. ut asides small amounts of money each week from your paycheck for savings and investment and use that.
The learning curve for investing in stocks can be steep, but in the final analysis is well worth it. In no other endeavor can you make the types of returns that are associated with the world’s greatest stock investors. But make sure to take your time, and keep detailed records of all of your transactions, with particular attention being paid to what you were thinking when you made the trade. Over time, this record will become an invaluable instrument for helping you determine what type of trade makes you the most money, and it will also give you insights into your character as a trader. There’s plenty more to learn, of course, but hopefully these basic ideas will help you on your stock investing journey. Good luck.
Darren McLaughlin is the webmaster of the Stock Market Basics resource center.
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