Tuesday, February 4, 2014

Which Penny Stocks to Buy

When it comes to determining the best time to buy penny stocks there are two separate theories that most people believe in. These theories are known as the Fundamental analysis and the Technical analysis. Let's take a look at both of these theories in a little more detail now:

1. The Fundamental analysis will have you focusing on the profitability and products instead of on the current market price of the stock. You will see how this company matches up to its competitors.

2. The Technical analysis will have you current price of the stock without taking into anything else into account.

And do you know what the best part is? Both theories have the same success ratios. Amazing!

If you are just starting off in the stock market then it is recommended that you start slow. You need to understand the trend of a stock before making any trades on it. This will allow you to determine in which direction a stock is heading and reduce your risk substantially. You need to analyze historical charts and determine whether the price of the stock rises in the long run or whether a downtrend is noticeable in the foreseeable future. Make your trades accordingly.

This is the time when you will need to start gathering more information about a stock. The internet is a great place to start since almost any and everything gets posted online nowadays. Be careful and remember to check your sources though as not everything you read on the internet can be taken at face value. And if you find an online source that is telling you exactly when to buy penny stocks then you should move on as any reputable source will never give you fixed timelines. They can only be used as a sort of guide to when the best time to buy a penny stock is and nothing else. And as you gather more and more information about a penny stock you will find it much easier to trade in it.

Before placing any trades it is recommended that you take a look at a company's financials. Check for any signs of weakness or if there are any indications of a negative trend anywhere. Understanding how the company is doing today is of vital importance if you want to be able to predict the future of its stock.

You should also take into account the information given by analysts regarding a stock. Remember to check the reputation of an analyst though as going to an analyst who doesn't really know what he/she is doing could be suicidal. Considering the fact that most penny stocks aren't worth too much money you can effectively look at earning a lot of money while not putting too much at risk. So what are you waiting for? Start trading in penny stocks today.