Saturday, March 26, 2011

The Correct Way To Trade The Most Discussed Penny Stocks

By Johannes Spinoza

When trading penny stocks you start to dig for info right away you'll find penny share forums once in the forum you will spot heavily discussed penny stocks. Straight away this should set off caution signals and you must become doubtful of the excitement.

This isn't to say the stock is no good but there are reasons its being debated and frequently these consultations are the results of folk who are the owners of shares of the company exaggerating it to raise the price per share so they can sell. Or, people who've been paid to plug the stock doing a good job at promoting by keeping the symbol in the pinnacle of the forums and conspicuous to each trader that visits the forum.

This is what us penny traders call "hype". On occasions "hype" can basically get the price rising and everybody in low will profit. This is a nice thing but doesn't invariably make the company a profitable investment. There are better methods to research and find firms to invest in.

Stock promoters live upon new and young traders. They're looking to take advantage of the get rich fast mindset of the young stock trading crowd. They will pump their stock up whatever whats going on telling everyone that's the subsequent Microsoft and then when the stock does poorly they will blame the exposed shorters. Exposed shorters are traders who short penny stocks without owning any shares.

When they short one of those stocks, they are gambling the price will drop and with these uncertain stocks they're usually right. Because the overall population can't short these stocks they feel these exposed shorters are insiders manipulating their stock so they can buy at a less expensive price Its down to these shorts that their great profit generating stock isn't going up in cost. This is about as real as the boogeyman.

Buy stocks for the right reasons, not because they're the most discussed penny stocks and have more folks excited on some random message board than any other stock.

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