The Rules of Penny Stocks
In order to function properly, rules must be followed when dealing with things like penny stocks. Penny stocks may seem uncomplicated and easy to handle, but that’s the type of thinking that could lose you hundreds, if not thousands, of dollars. Since the point of investing in these stocks is usually to ease out of debt rather than adding to it, chances are that you’d like to know what those rules entail before you shoulder the burden of buying these stocks. And, surprisingly, despite its light hearted name, it can indeed be a burden if you don’t know what you’re doing, but have entrenched yourself too deeply into the market to get out.
Despite the popularly held notion that these stocks can be handled the same as regular stocks, penny stocks actually require a lot more time, effort, and thought then most people are willing to put into it. Some general rules designed to help you out when dealing with penny stocks include the following two tips:
Never pick a stock based on the results of one day’s research. Usually there’s a chart that shows a stock’s rises and falls in the market. Just because a stock looks good on Monday, doesn’t mean that things will stay that way come Tuesday. No matter how impatient you are to get started, and no matter how good a stock looks, watch it for no less than a couple of weeks to see what its pattern looks like. Having a good idea as to when the stock prices fall and when they rise again can tell you a lot about a company and whether or not you should invest.
Though it’s helpful when a stock is featured in a major market like NASDAQ, that doesn’t mean that the company is well off. Checking with NASDAQ about a stock is sort of like checking whether or not a school is accredited, or if the people you work for are legit. It’s a place to get news, research and market activity concerning your chosen penny stock. Not all stocks are listed there but most will be, and if, or when, you find what you’re looking for, be sure to check all the information NASDAQ has about the company to be sure you’re making the right choice.
Hopefully, you got the message that both rules were trying to send. Split second decisions based on a handful of knowledge will get you nowhere fast. Research, in the case of penny stocks, is key, and the better you are at it, as well as the more patience you happen to possess, will go a long way towards guaranteeing a successful investment.
This article about Penny Stocks was provided by Robert Adler from Hot Penny Stock Trading Tips.
Tags: Penny, Rules, Stocks
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