Learn The Stock Market And How to Trade

Many people (myself included) have been called to the alluring returns of the penny stocks.  My Google search history is filled with hot stocks penny terms trying to find some secret insight.  There is one serious problem I see, not as bad today, really bad in the earlier years of online trading.  Hot penny stock picks are more susceptible to price manipulation then giant blue chip stocks or the Forex exchange. 

Hot Penny Stocks to Buy

You’ll find these lists all over the web.  The problem you don’t know if the intent of the list is to show off someone’s investing brilliance or to pump a stock up so they can sell out of it for a better price.  This scam is called the pump and dump and it comes in a couple of different varieties.  One version involves a stock market blog or site touting some inside knowledge of a thinly traded stock.  People read the blog posting, see the stock is only a couple of pennies per share and figure they’ll throw a few bucks at it.  If a couple of thousand people do this the trading volume of that stock just increase exponentially for the day and the price skyrockets on nothing.  The person who put up the blog posting sells the stock and buys a new unheard stock and does it again.  You can also find these people talking on forums and in chat rooms doing the same thing.  Some are very good maintaining well thought out arguments and conversations making the situation very convincing.  They’ll get you feeling like you’re among an elite group who knows this information and you’ll all get rich.  Most of the scam artists just sound like robots though.

How to Really Buy Hot Penny Stocks?

I recommend you put very little weight on technical analysis when picking penny stocks.  Unless you are truly day trading them (and I mean glued to your computer screen, no bathroom breaks allowed.)  For most of us it’s ok to dedicate a few percent of our portfolio to the penny stocks, but I would choose them on fundamentals.  Look for stocks that have low debt, good growth, some kind of moat that makes them unique so they don’t get squashed by the competition.  You may lose some completely, but a few of them may get you huge returns for years to counter it.  I personally keep my penny stock choices under 5% of my portfolio

Related posts:

1. How to Buy Penny Stocks
2. What To Consider When Buying Penny Stocks
3. The World of Penny Stocks
4. Buy Penny Stock Online
5. Make Millions in the Penny Stock Market