Making an investment in penny stocks is all about outlining the rules and playing by them as all the enormously stockholders have before you.
Big time traders and investors have played by the rules and started out little, or perhaps miniscule, swearing by an outlined set of rules that fundamentally state they will not continue any cycle of failing that loses them cash, repeatedly.
Losing money instead of learning these rules is something that's unacceptable and potentially crippling to a new investor – although your cerebral cortex is trying to tell you that “Heck, it is unimportant, they're only Penny Shares after all!” (Damn you brain!)
Nevertheless follow a few easy rules and you should be ahead of the penny share investing game.
Number One and MOST important – Never, ever, under any circumstance borrow money to invest; this is most likely the biggest rule to stay out of investment difficulty.
Yes, I know! You believe that you have the upper hand with some inside info that could help you build a huge portfolio in virtually no time!
So have lots of others before you – and they were all WRONG!
Please, don’t jump on a story with the only answer being getting a loan. If you begin to lose money on the stock market, then the debt repayment will come immediately out of your pocket. If this occurs, trust me – you're now in huge difficulty.
Whether or not you start to earn money then you'll be spending it to reimburse the loan rather than saving or reinvesting the funds. This money will stand by and haunt you as you continue to try to earn a living off of the stocks you are trading.
Always save up to be able to invest as a rough guide, debt will be chased until you eventually catch up by being farther behind than you were to start with.
Don't Do IT!
Making an investment in profitable companies is a massive rule not to forget when making an investment in penny stocks and shares. My opinion is that reads and sounds extremely stupid and a waste of breath but listen to me – often folk simply invest in a company without determining if the company is profitable or not.
Either they like the name itself – or the product/service the company offers – or perhaps they know a cousin of the manager of the typing pool and reckon it’s keeping it in the family!
Do not be the sucker that gets a stock and then tunes in to the TV or logs on to the web to see that its quarterly earnings are down and its revenue per share is dropping like a four-ton boulder of the Empire State building – very hard and extraordinarily fast).
Find information on how to find a profitable company, it is readily available on the internet, and then define which company to invest in. Guides for how to appraise firms, their accounts declarations and markets are freely available.
Also , do your homework, research and analysis before you buy a stock that is not gathering any kind of attention.
One of the main things for financiers to have a look at is volume, anything less than 1,000,000 shares each day isn't worth touching. It's a useless task to buy a stock that's trading 9,000 shares a day because it'll be nearly impossible to sell when you are prepared to do that.
Stocks require a little attention to have liquidity, which essentially means that for it to sell it must have price. Do not be stuck with a rising stock that you are going to be unable to sell later . Do not just thinkof all of the beautiful profit you may generate – consider the details of really having the ability to realize that profit. After all – so what if you have made $1.20 per share in a quarter – if you can't actually sell them!
For some more information on Investment Strategy: The Investor’s Elements, please feel free to visit our complete set of resources and extra articles, including some at Investor Awareness Campaign: A Glance at the Other Side.