Today we will discuss to you what the best penny stocks in the market are. We will also give you some tips when it comes to investing in penny stocks.
Tips for Penny Stock Investor
For any investors, especially you, who want to trade in penny stocks, there are important tips you should know about.
These tips will help you become the penny stock trader you wish to be. It will help you know what to expect and what are the things you should avoid upon entering the market.
Avoid Free Stock Picks
Penny stocks are lightly followed, and they are usually very thinly traded. This, together with their super-low price per share, it makes them the ideal vehicle for promoters and scam artists.
There are times when people will purchase a ton of some near-bankrupt penny stock, and they would lie to push the price share up. They might say that the company is about to get a major business deal with Google.
This usually helps increase the value of the penny stock, which actually create a profit for the scammer. As the share increase in value, they sell their holdings at the artificial price which they made. This is also one of the reasons why the shares crashes back down to near-worthless status.
There are also other reasons for putting out free stock picks, whether on message boards, or on a sign-up-free online newsletter.
This sometimes involves an individual who purchased the penny stock and tries to inflate the value of their investment.
However, there are cases wherein companies are paying various people or services to tell the world all about their business.
Meanwhile, it is normal for a small publicly trade to pay a six-figure amount to get the right exposure. An exposure that results to the shares getting lifted so that they can issue more stock at a better price. They can also raise money easily.
Keep in mind that free stock picks exist due to the vested interests of the company or a scam artist. You should always look out for ads in disguise and your research first.
100% Unbiased Guarantee
Do not trust any sites which do not point to a 100 percent-unbiased guarantee. No matter what they call it, you should only trust a service that ensures your best interests are front and center.
They should be committed to everyone that they will not trade in the shares they tell their clients, and certainly not be simply touting their own investments.
Technical Analysis Tools
There are some interesting online tools, which you can use to improve your trading results like the Relative Strength Index.
Relative Strength Index is just one example from other possible technical analysis options. You just have to do your research and decide which ones work best for you.
Stop Loss Orders
One of the most important tactics when it comes to investing in penny stocks is to use stop loss orders. With penny stocks, you commit early on to immediately sell your shares if the price falls to a certain point.
If you stick to this self-imposed rule, you will be limiting your downside to 5 percent. With this, you will take a few very small losses, but at the same time be open to the tremendous upside that penny stocks often offer.
You may also see better overall trading results by selling your losing positions very early, and let your gains running.
Avoid Low-Quality Markets
There is a wide range of stock markets wherein you can trade penny stocks. However, you must keep in mind that these exchanges are not equally made.
In fact, one of the most effective ways to avoid the risks of low-priced shares is to keep on the “good neighborhoods.” With this, you can improve your possible odds of success.
Considering that penny stocks are any shares which you can trade less than $5, there are plenty of penny stocks on major exchanges, such as NYSE, NASDAQ, and the American Stock Exchange.
There are some stock which trade for less than a dollar and yet it still trade on these “big-board” markets.
Moreover, you will usually find most of penny stocks trading at these locations:
· The Pink Sheets, OTCQY, and OTCQB
These are the main junky markets and they are dangerous to all penny stock investors. As the fees, reporting requirements, and operating standards have been thrown out the window, just about any other businesses can get listed on these channels.
For example, a hotdog stand, an in-home art studio, or even a one-man mechanic shop can be listed on these markets. Since they have a low standard to get started, and almost have non-existent fees, just about anyone can get their company on them to be publicly traded.
This is why a concentration of a poor company can be found on the Pink Sheets and OTCQX. Meanwhile, the vast majority do not pass Leeds Analysis when they look at them.
Just remember that by avoiding these channels, you will lessen the vast majority of a downside risks.
· The Bulletin Board
This channel is owned by the NASDAQ and as such has listing fees, standards, reporting requirements, and the companies trading upon it have a responsibility to offer the shareholders with a timely financial documentation.
Meanwhile, higher-quality penny stocks are listed here when they are shy to attain the status, which comes with the NYSE or NASDAQ.
Top 5 Penny Stocks
Investing in penny stocks has been a risk to be undertaking when the volatility of the market is high. Since this kind of business involves investing in the potential of a company. It requires a considerable investing experience.
Today we will show you some of the best penny stock you should look out this year.
Hecla Mining Company (NYSE:HL)
In a time of political and economic vagueness, the oldest minerals stock on the exchange is a place where investors could run into.
Hecla Mining Company, which was founded in the year 1891, specializes in precious minerals mining. It also reported that it has a record for silver reserves for 10 years straight.
Alibaba Group Holding Ltd. (NYSE:BABA)
It is one of the best cheap stocks out there. For the next two year, Alibaba is expected to increase 30 percent in sales. The increase would make the company the largest retailer in the world.
With $18 billion additional investments and $200 billion market capitalization, this company passes as one of the best-performing penny stocks to purchase today.
Actually, all the pointers indicate that Alibaba is going higher and higher, and most likely to outperform Apple and Alphabet.
Plug Power Inc. (PLUG)
This company is a player in the alternative energy industry. It focuses on the field of hydrogen fuel cell technology. The business offers fuel cell solutions to the material handling and stationary sectors.
It is based in Latham, New York and was founded on 1997. This indicates that there is some longevity to the story amid its status now as a penny stock.
The operating income has been declining for the past years, and it continued last year. But, the stock price seems to have reached a bottom in the first few months of 2017, and it broke out in March and April on a strong trading volume.
Although the company saw its shares falling in November 2017 and in early 2018, the stock could provide investors a solid gain as the alternative energy industry gathers strength.
Luna Innovations Inc. (LUNA)
This company bounced to $5 in 2010 following an all-time low at 26-cents during the economic collapse 10 years ago. Luna Innovations spent the next six years carving a rounded correction that found support just below a buck in early 2016.
Meanwhile, the stock went up in January 2017, stalling at $2.33, ahead of a December breakout that reached a 4-year high.
This positive price action may now support a critical test at 2010 resistance. Conservative players who are looking for a low-risk entry may need to wait for a decline into the 50-day EMA, which is now rising from $2.50.
It is a defense design and a manufacturing business that is capitalizing on two of the largest growing industries, Drones and Virtual Reality.
Meanwhile, the difference of Aerotech with other companies is that it services 80 percent of the growing global aviation industry. They are the one who create technology for the military and law enforcement.
Aerotech is expected to be a hot stock when they announce its fourth quarter earnings early next year, following the report of a strong increasing in operating income for the third quarter compared to the last period.
Investing in penny stocks is a risky activity especially if you do not have any background knowledge about it. This is why it is important for you as an investor to do your own research.
Read some tips that would help you lessen the risks that are waiting for you in the market. It would also be great if you know what the best penny stocks to invest are.
Always remember that before you enter any market, do your research first.
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