Wednesday, March 30, 2011

Penny Stocks - How Can They Work, And Where Can The Neatest Ones Be Found?

By Ferdinand Lawrence

Penny stocks are a few of the best and exciting stocks to trade. However regardless of the excitement and potential profitability of these firms, most penny stocks remain mostly unknown. Folks write me all of the time wishing to know what penny stocks are actually all about. Hopefully I'm able to shine some light on the topic for you.

First discovered penny stocks a couple of years gone. I had been a successful trader of enormous cap NYSE and NDX stocks but had not dabbled in penny stocks before. Penny stocks often trade on smaller exchanges than the NY Stock Exchange. Most frequently, penny stocks trade on the OTCBB ( over the counter notice board ) or pink sheet exchanges. Occasionally they also trade on the Naz or AMEX. The biggest difference between penny stocks and the bigger stocks is the volatility.

Volatility may appear like an evil world, but seasoned traders know that volatility is always a trader's best mate. In fact, you can not earn cash on a stock that isn't moving. While a bigger stock may make movements of one percent to perhaps ten percent on a wild day, penny stocks make much bigger moves. Penny stocks can simply move 10-50% in 24 hours. I have seen examples of penny stocks making gains the size of 1000%-2000% in just one day.

There's only one key to trading penny stocks successfully. Timing. It all boils down to timing. Knowing when to get in, and just as important when to get out.

You have got to zoom in on the underground penny stock community and hear what they are exclaiming. There are bulletin boards, notice boards, and newsletters.

When I initially began trading penny stocks I was completely bewildered. It was awfully challenging and I gave up, till I started following penny stock newsletters. They send out news and penny stock picks. What I liked about the newsletters more than only going into chat rooms, was that newsletters truly appeared to deliver in the most significant area timing. They appear to get the timing right. Lots of the time penny stocks make huge moves as quickly as a newsletter covers it.

Penny stocks can be played long-term too, and aren't only for traders looking to profit short term gains. The majority of the newsletters I have followed send out both long-term and short term picks for penny stocks.

I have seen lots of success with penny stocks. The stories you hear about folk turning $1,000 into $1,000,000 can be correct. The trick is to get the timing right. My proposal? Begin following a newsletter and find out more about penny stocks for yourself.

There are one or two good ones out there that I like, but I have found this one Penny Stock Alerts to be the most trusty for sending out winning picks. Penny stocks are definitely the wild west of the market, so good luck out there and trade rigorously!

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