The Guide for Penny Stock Investing

November 23, 2009 by admin
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Spock like?

Yup – use pure logic! No emotions.

See, you need to always keep in mind that these penny stocks are companies starting out in the business world, not the big dogs trying to make another penny. They aren’t necessarily bad investments, but they aren’t good enough to get an investment banker’s money in an IPO.

Be realistic about penny stocks and realize that you won’t find the next tremendously big thing here, but you can find some exciting opportunities with good work.

So what to look for, what are the signs that would indicate a Penny Stock investment worth considering?

• A consistently high volume of shares that are actually being traded is one thing that you should definitely look for in a penny stock investment. But be careful here, because it’s possible to skew the results of average volume trading, go with the consistent volume to get a good idea of what the stock will provide as an acceptable rate of return. Also, make sure the liquidity of the penny stock is something you make a note to look at, how many people are selling and buying everyday? Don’t end up being left with “dead money”, effectively money that you can only release by selling the penny stock at the bid (dumping, in other words) and losing money because the price is diving.

• The company’s profitability is also very important. If it is a start up company that is running a loss then see why they are losing money. It’s not at all uncommon for this to happen but you need to assure yourself that they can manage it and turn it around or will they continue to struggle and lose money for your future. If they grow then your investment grows. Try and make time to do some in depth research to find the right companies and find the best return you can get for your dollar. The more diligence you put in at the beginning – the more profit you look to take out at the end.

• Understand the danger of penny stocks, the speed within which they can and normally do rise and fall in value. Always create an exit plan on any investment (i.e. knowledge of “at what price you sell the stock regardless”), have a solid plan on where to start and make sure it includes where exactly to finish. If you buy a stock and make a 20% return on investment then you are doing extremely well. Do it right five times and you are in the money, wrong five times and you may very well be done. Listen to what the market is telling you, if it is time to get out, then get out. (No emotions, remember Spock!!)

• Place some confidence in how you found out about the stock only if that source warrants your confidence in the first place. If it was in a mailing list then who, where, and when did you get it – and more importantly, WHY?? What’s the connection of you and the sender / recommending party. Nothing? Bin it! trust me – gifts of that nature don’t happen, ever!

I get an average of 10 emails a day with “stock tips” I’d be a fool to ignore! So I do, ‘cos I’m a fool.

Oh looky, super hot tip number one has just plummeted, crashed and burned. Shucks, and I was just about to invest in it – NOT!!

Some are real and reliable updates and advices whilst others (most others) will attempt to “pump and dump” to make money off of the innocent.

Don’t be caught in the middle of someone pumping the stock, and then dumping its shares to unwitting subscribers. Subscribe to a newsletter and then track their investment. If they are legitimately making money then they are probably safe, if not, then it is time for you to move on to the next possibility.

• Don’t overextend yourself on penny stocks alone, no more than one fifth of your investment should be in penny stocks at a given time. (Pssst. Big Tip Here – Don’t over extend yourself on ANY investments – penny or otherwise, always invest within your ancillary income, never touch your cost of living means and NEVER, EVER UNDER ANY CIRCUMSTANCE BORROW TO INVEST.)

Follow these rules and you will be in great shape!

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Article Source:http://www.articlesbase.com/day-trading-articles/the-guide-for-penny-stock-investing-1482337.html

Tags: acceptable rate, investment worth, penny stock, penny stocks, stock investment

Is an Inverted Yield Curve Bad For Stock Investors?

November 15, 2009 by admin
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We all know what the word ‘yield’ means. It tells us how much we can expect to get – or earn, in some cases – for our investment. This could refer to planting seeds, investing money or many other situations. If we invest money in stocks of some kind, the yield we get will be the amount of profit we make on that investment. But what about an inverted yield curve – and what does it mean for stock investors?

Imagine a graph where the curve gradually goes upwards – signaling better returns the longer you keep your investment in place for. Now imagine that curve flipped over from top to bottom, so that what was a gradually climbing curve now shoots upwards quickly before dipping down again. This is what we call an inverted yield curve.

Now you can see from this that such a curve means you will see some nice profits from your stock investment in a very short space of time. But the longer you leave your investment in place, the lower those returns will go. In fact, it would be in your best interests to bail out early instead of waiting for better returns – because those better returns probably won’t materialize.

So where does this leave you? Are these curves bad for your investments, or is there more to this than meets the eye?

In truth they aren’t bad at all. The only thing you need to remember is to monitor your investments to see if you can spot any inverted curves as they reach the peak of their cycle. This is when you need to bail out, otherwise you will not realize the best potential and returns from those stocks.

These curves are closely tied in with interest rates too. Indeed it has been proven in the past that a curve of this nature can be a precursor to a recession. It doesn’t always happen, but it happens more often than not to be down to just chance.

You need to think about short term and long term when it comes to those rates. The short term ones are habitually lower than the long term ones, but when that gets flipped on its head, we see an inverted curve.

So if you are thinking of investing or you already have some investments in place, remember the inverted yield curve and keep an eye out for it. It could save you from losing money.

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Article Source:http://www.articlesbase.com/day-trading-articles/is-an-inverted-yield-curve-bad-for-stock-investors-1460359.html

Tags: inverted curve, inverted yield curve, planting seeds, stock investment, stock investors

Beginner Investing – Stock Market for Beginners

October 28, 2009 by admin
Filed under Day Trading

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1. Set the goals to be achieved: by goal setting, we do not mean daily money goals for any investor, rather setting up goals can be segregated into many parts:

* Firstly, the financial goals. These goals refer to the estimated profit one calculates over his investments. Setting short-term money goals and running after them is of no use.

* Secondly, the path to reach these goals is to be settled. Believe us, stock investing is no one day miracle; hence, it needs time, patience and consistency to flourish. Hence, there are no short cuts to be followed.

* Thirdly, setting goals involves the money one wants to save. Each investor must make an estimate of how much to be saved and how much to be invested.

2. Identify your taste of investments: it is important to identify of what type of investor you are? Your investing approach and things you are attracted to, is an inevitable feature. For example, a day trader may be long term or short tem player and so on. Also, the risk bearing capability contributes to the type of investor. Very often, it is said that “no pains, no gains”, this applies to stock market too. An investor who does not have sound risk bearing capability cannot grow much in this industry.

3. The third investing step includes segregating the investments: we all know that there are hundreds of investment options available in the stock market. It is the investor’s choice to pick a bunch of the investment companies. Hence, any day trader may pick any bunch of a particular type of investments and work accordingly. Picking a mix of investment type not only contribute to better returns but also maintains a balanced portfolio of the investor.

4. Tracking the investment: once a particular mix of investments is picked and the amount is integrated to various shares of different companies, here comes the main task that is, tracking them. Keeping a track of investments decides the time of buying and selling of stocks corresponding to their process. Also, tracking the investments decides the profits and losses for any investor.

Last but not the least, always remember that investing steps starts and end with clear goals and good information. Any stock trader that posses clear goals in his mind would do each and every possible effort to achieve them. Unclear goals create confusions and decisions in hustle. Also, good information lets an investor to devise a plan it to contribute to the feasible and practical goals. Hence, the mantra remains with smart investing accompanied by clear, practical goals and good information.