Penny Stock Investing and Trading

If you ask anyone in the financial world what they think about investing or trading penny stocks, the answer that you will probably get will be: “Don’t do it. You will lose your money since 90% of penny stock companies are scams. penny stock companies just want to sell shares and are not interested in developing their businesses.” The truth is that investing or trading penny stocks is a very risky business. So here is the most important tip about penny stocks: Invest only money that you can afford to lose.

If penny stocks are so risky then, why do people invest in or trade them?
The answer is because you can make a lot of money in a short time if you know what you are doing.

If you are still reading and have decided that you want to trade penny stocks, you need the right tools and good advice to help you survive and even win some money.

Step # 1 – Finding the Right Penny Stock to Buy

To discover the right one stock, you will have to do some investigation, or Due Diligence. There are a lot of websites that will help you with your DD and you can find a list of useful ones at www.stocks-reporter.com.

The following points will guide you in learning important information about a company in which you are interested in investing:

1. Share structure: AS (Shares Authorized) and OS (Outstanding Stock) and Float.
2. Transfer agent transparency
3. SEC filing
4. Financial track record
5. Competitive position in its industry
6. Business model
7. Earnings power
8. Valuation or the potential value of the company.

For example, when looking into share structure what you want to see is that there is no dilution. A good sign is when the company has maximized the OS and is close to AS. Watching Level 2 will also give you good indication if there is any dilution from the company. A good strategy is to follow insiders who know the company better than anyone else.

Step # 2 – Deciding When to Buy

After finding the penny stock that you plan to buy, you have to find your entry point and how to execute it the right way. Following the trading in that particular stock for a few days together with chart analyzing will give you a lot of valuable information. At this point it is highly recommended for anyone to learn some basic chart reading or at least let others analyze the chart for you. You can ask for help on many of the popular message boards that discuss stock trading and chart analyzing. An important tip about how to execute the trade in a penny stock is: Be very patient and always try to buy at the BID price.

Step # 3 – When to Sell or The Exit Strategy

The exit strategy is something very personal to different traders or investors.
It is very important to implement your strategy immediately after executing the buy order. In most cases, a good idea would be to set a sell order of 50% of your position at around 20%-30% PPS spike. Another 10%-20% rise of PPS and then sell another 50% of your current position and let the rest ride for a while. In general, your exit strategy should be very flexible and change with news, momentum, and volume. 90% of the time, though, you should sell at the ASK so it won’t affect the run.

TIP: Remember always to take profits.

Happy Trading

Ron Kaye
Stocks-Reporter.com

Selecting a good Stock Trading Software

There are so many different stock trading software packages on the market that you could try a different one, every day of the year, and never run the same one twice.

Many trading professionals use some type of stock trading software to keep their emotions in check and to enable them to focus on their stock trading strategy while avoiding the effects of fear and greed.

Depending upon the program that you choose, stock trading software can help you in the following areas:

• Identify Channel Breakouts
• Generate high probability mechanical buy/sell signals
• Control your dollar risk
• Forecast new tops and bottoms with great accuracy
• Reveal trading trends for any time frame
• Timing Bands to forecast the dates/times for the next cycle high, and cycle low.
• Curb your tendencies toward Fear and Greed

The nice thing about using stock trading software is that is has no emotions. It doesn't love or hate the stock that you own and it doesn't want to get rich. It simply crunches numbers and tells you what it "thinks" about when to buy, sell, or hold. And while it is not flawless, it's a lot smarter than most of us are.

Stock trading software is not really a necessity if you are investing in stocks and will be holding them for long periods of time. If, however, you are day, swing, or position trading, then it is an absolute requirement for you to be able to watch every up and down ticks, monitor your short positions, and stay on top of your stop loss settings. This is where stock trading software excels.

Before selecting a stock trading software package, download and try it out first. If the program that you are considering doesn't have a free trial, or a 100% money-back guarantee, then pass and look for another. Software that doesn't meet your requirements isn't going to do you a bit of good.

Although there are software packages that specialize in one particular function, such as providing real-time stock quotes, for example, you would be better off to select an all-in-one package that provides everything you need to make informed decisions. As a minimum, your stock trading software should provide the following:

• The opening price of the day in each market to determine price direction.
• Telltale signs in the market that signal a breakout to the upside (or downside if trading short) is coming and allow you to position yourself to profit with the move.
• Moving average monitoring that shows you the average price of a security over a specified time period (the most common being 20, 30, 50, 100 and 200 days), used in order to spot pricing trends by flattening out large fluctuations.
• Trigger monitor that will alert you to preset events such as such as reaching a specified price target or some other event that alerts you to take prescribed action.
• Pattern Identification so you can identify patterns in any market and use them to your advantage. This gives you a greater chance of selling at the top and buying at the bottom of the markets.

Stock trading software is a must have for all serious investors. You cannot afford to trade in today's markets without having the impartial advice and inside intelligence that a good software trading system provides.

About The Author
Stock-Trading-advice.com provide you with solid information and articles that you can use to increase your personal wealth by making the right investment and trading decisions.
contact@stock-trading-advice.com

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by trading stocks, then there are three things you need to do, and do well.

• Money management
• Orders
• Trading system

Money management

Money management comes first. Without a rock-solid method of managing your trading funds, you trading results will be only be fair at best. Money management is more than just knowing how much money you have tied up in a trade. It's a method of using the right portion of your trading account on any one trade relative to the perceived risk and reward.

There are a few things to consider to managing a trade successfully:

1. What is your account size?
2. How profitable is your trading system?
3. What is the initial amount at risk on a per share basis?
4. What is the profit potential?

Account size

Your account size determines how long you stay in the trading game. If you are skillful, then you will not require a large account. On the other hand, even if you are a new trader, you can use a small account as long as you control your risk.

Controlling the risk means never using more money then you need on any one trade. A very simple formula for stock market success is to risk less than 3% of your total account value on a single trade.

If you have a $10,000 account, this means you never lose more than $300 per trade. If your account drops to $9,000, then you risk less than $270.

As your account grows, while the total amount at risk increases, you still only risk a maximum of 3% of your account. Say your account is at $12,000, then your maximum amount at risk is $360.

In theory, this ensures that you never go broke! And that is of utmost importance.

Profitable

If your system is profitable, then you will typically win more money then you lose. While some consider the percentage of winners relative to the number of losers, nothing could be further from the truth.

It doesn't do you any good to have a system that wins on nine out of very ten trades if you give all of your gains back on the one loser. More important is that the winners overwhelm the losers.

A profitable trading system might have a third of the trades result in the maximum loss planned for, a third of the trades either make or lose a little money, and a third of the trades bring in the profits.

Risk

It's worth repeating, risk no more than 3% of your total account value on any one trade. If you keep this in mind, you are ensured of minimizing losses to your account. At what price you enter a stock and where you place your initial stop price are used to determine how many shares you trade.

Profit

The profit potential of a system is the "edge". If you can estimate how much money you *might* make over time, and if that profit comes from many trades over time, then you probably have a winning system.

A trading system will either have a profit target that determines when to enter AND exit (good) or it will tell you when to enter and keep you in a profitable trade as long as possible without giving back much, or any, gains (better).

Orders

No matter what trading pattern you use to enter a stock, you will make the most money by using the correct orders.

When you wait until a stock has proven it's intensions - typically by trading above the previous day's high for a buy, or below the previous day's low for a sell short - then having an order in place that captures that exact price is crucial.

Let's say your favorite trading pattern signals a buy for. If you are an end of day trader, then the next morning you watch the opening price for the stock. If the stock opens less then yesterday's high, you place a stop order to buy above the previous day's high. Even better is to include a limit price with that buy stop order.

How much above the previous day's high is your call. As long as it is greater than the previous day's high, you are making the stock prove that it is going up.

Sure, you give up some of the profit potential. But you are more likely to turn a profit with a stock that is moving in your favor.

Once you are in a position, then you need to protect yourself from loss. If your method of picking stocks is good, then it's unlikely that the stock will revisit the current prices. Continuing with the buy example, to protect your account from a catostrophic loss, place a good-till-cancel sell stop order below the recent low. If yesterday's low is lower then the current day's low, that's where the sell stop order goes.

And make certain that the order does not include a limit. Stocks can and do gap down. Expecting that you will have a sell order filled at your stop price is a quick way to the poor house.

Trading system

Your choice of what method to enter and exit stocks plays a critical part in your stock market sucess.

A great trading system looks for low risk opportunities to enter a stock. Knowing at exactly what price signal to enter and when to exit - even if it is for a small loss - will keep your account growing. As long as you consistently follow the rules layed out by a well designed trading plan, you can count on steadily growing your trading account.

My favorite trading pattern does a great job of identifying stock likely to move rapidly in your favor.

There is no reason to be trading stocks that are not ready to deliver the biggest gains in the least amount of time.

If you are serious about taking your stock trading to a higher level, then read about this trading pattern.

Regards,

Dave

About The Author
Dave Wooding is NOT a registered investment advisor, nor does he suggest you trade with money you can't afford to lose. Instead, he offers practical swing trading pattern information at http://www.trading-pattern.com that comes from years of trading experience.

Do You Know What is the Single MOST Critical Mistake in Trading the Stock Market…?

Well maybe that's overstating it a little, but it's certainly one of the most important.

It is…(drum roll please)… “the need to be right”!

Now that probably wasn't what you were expecting. You might have thought it was going to be something like not picking the trend or putting too much money on a single trade or one of a dozen other things.

But I can assure you, from bitter experience, that this one attitude causes more problems than most other things you might do as a trader. And it's worse for men! Something to do with ego or testosterone…

You see our whole society is based on the importance of being right. The need to be right.

Your parents rewarded you when you are right and told you off when you were “wrong”. They probably still do this now that you are grown up!

>From your earliest days at school you are taught that being right is the most important thing. Isn't that what tests teach you? And this is reinforced through the rest of your life. Your boss probably reminds you of this just about every day!

But some of the best things occur when we aren't right. Like the time you take a wrong turn. Either in your travels or in your life. And you end up at this amazing place or with this amazing person that you never would have, had you done the “right” thing.

Plus there's not a lot of point beating yourself up when you aren't “right”. Because, as we all know, it's going to happen pretty regularly!

Coming from Australia, I don't know a lot about baseball. But I do understand that batters get paid a lot of money to miss hit the ball an awful lot! Think about that. Top baseballers step up to the plate every day knowing that they are more than likely not going to get it “right”. Yet they are confident and successful because they know that over a season they are going to get it right often enough.

Don't Beat Yourself Up or the Market Will join In!

I went to a speed-reading course many years ago. I didn't learn how to read faster (!) but I did learn an attitude that has stuck with me ever since. It is - “Focus. No attachment to the outcome.”

This guy was telling us about how he taught elite sportsmen to achieve their best (hope he was better at that than teaching people how to read fast!). He explained that the trick was to get them to keep taking the shot (or making the jump or whatever) without getting upset with themselves if they got it wrong.

The key was for them to focus on what they had to do in that moment, not on the outcome.

Maybe I have lost you? But the point I'm trying to make is that you need to go into each of your trades with your focus - not on being right - but on following your trading system.

And then the key is to not beat yourself up if you “get it wrong”. Because if you have followed your system and you know the system works over time, you have done the “right” thing.

Once you have confidence in your trading method your only focus is on following the signals.

“Focus. No attachment to the outcome.”

By the way, try this approach in other areas of your life. It really works! My golf was much better once I stopped getting angry at myself for every lousy shot.

Deadly Attitude in the Market

In the stock market you can't afford to hold onto the need to be “right”!

When trading, you cannot be right 100% of the time. In fact, you can be right only 50% of the time and still make lots of money. But this means you have to be wrong an awful lot!

The market will do what the market will do - no matter what your opinion might be. If you are holding a stock and you expect it to go up in price but it starts to go down, what happens?

If you are like me, a little voice inside says something like “…but this wasn't meant to happen!…it can't do this to me!… I know I'm right - it's just a temporary set back; it will come right, I'll just wait it out…

This “voice of reason” is your ego. You can't bear to be wrong, so you justify your decision to yourself. You must be right! You tell yourself that you know what's going to happen…the market's just confused…it's just got it wrong! (totally illogical reasoning - the market can never be “wrong” - but it makes sense at the time!).

This deep-seated, primordial need that we have to be right can destroy you in the stock market. It will make you put too much money on one trade. And it will make you hold onto stocks that you should have sold days or even weeks ago.

It will mean you will miss opportunities you should have taken because your view was the opposite of what actually happens. And you can miss getting extra profits from a trade because you were convinced that “…it couldn't possibly go any higher…”

By being aware of this “need” you can overcome it - over time! You need to get to the point where you “want what the market wants”. Not what you want.

Just remember.

“Focus. No attachment to the outcome.”

The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn't worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.

About The Author
David Chandler
http://www.stockmarketgenie.com
For your FREE Stock Market Trading Mini Course:
"What The Wall Street Hot Shots Won't Tell You!" go to: http://www.stockmarketgenie.com

What Is Stock Trading and How Does It Work?

First a stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.

Stock trading is done at an exchange, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading floor. The other type of exchange is a virtual kind, composed of a network of computers where stock trading is done electronically.

A stock market is nothing more than a super-sophisticated farmers market linking buyers and sellers. You can use a broker for stock trading who act as a "market maker" for various stocks. They may match up buyers and sellers directly but also maintain an inventory of stocks to sell to other stock trading parties.

If you are new to investing online, don't put your entire life savings into an online account. Start with a smaller sum, which will be easier to handle and keep track of. Once you feel confident, you can then decide to add more money to your investing online account.

Once online, many investors tend to concentrate on stocks, specifically large-cap domestic stocks. While these stocks should make up part of your portfolio, they shouldn't be ALL of it! Take into account your time horizon and risk tolerance to develop a well-balanced portfolio of stocks, bonds, and cash.

If you're new to investing online and are looking to open a brokerage account, there are some important facts you should know before choosing a broker. Each one has strengths and weaknesses, but not everyone sees a broker in the same way. For example, if you're comfortable finding your own research for investing online, then the deep discount brokers will work well for you.

Ask yourself…

What services are offered? Do they have research available? What is the cost to you for investing online? What are the real commission costs to do a trade, including any handling fees? How are confirmations sent to you -- by e-mail, by snail mail, by phone? Can you enter orders by phone, by e-mail, directly on-line? Does it cost extra to call and talk to a broker for help with your account?

Spreading risk is critical to long term success in stock trading. If you have invested your entire savings into one company and that company’s stock falls by 50%, you have lost half your savings in one go. If you have spread your risk by investing in 4 companies, and one of the companies stock falls by 20%, you only lose in one area. Spreading risk assures you that if a stock goes down you have others to balance your situation.

About The Author
Matt Clarkson is a specialist in both traditional and online business that has years of experience in borrowing money and investing for capital growth.
The Free Information Online website is designed to help people find unbiased advice and tips with out the worry of any high pressure selling.
For more free and unbiased advice go to… http://www.freeinformationonline.com

At Last .. A Trading Veteran Reveals The Truth About Technical Analysis of Stocks vs. Fundamental Analysis

Nothing we do in society prepares us to function effectively in the commodity markets and an environment with no real boundaries. But, most of us are brought up to function well in society, so we`ve acquired strategies for fulfilling our needs and desires that are geared toward social interaction and acceptance. We don`t just take what we want, we take other people into consideration, too. Not only have we learned to depend on each other to fulfill our needs and desires, but in the process we`ve acquired many socially based techniques for assuring that other people behave in a manner that is consistent with what we want.

The commodity markets may seem like a social endeavour because there are so many people involved, but they`re not. While we may have learned to depend on each other to fulfill basic needs, the market environment is different: it`s every person for themselves.

Not only can you not depend on the market to do anything for you, but it`s extremely difficult to manipulate or control anything that the market does. If you`ve become effective in your personal lives at fulfilling your needs and desires by learning how to control your environment, but are existing as a trader in an environment that does not know, care, or respond to anything that is important to you, what do you do? You take control.

One of the principal reasons so many successful people have failed at trading, is that part of their success, outside the market, is due to their ability to control their social environment. To some degree, everyone has developed techniques to make their external environment meet their needs and desires. The problem is that none of those techniques work with the commodity markets. The commodity markets don`t respond to control and manipulation, unless you`re a very large trader.

However, you can control the way you deal with market information and your own behaviour. Instead of controlling your surroundings so that they fit your idea of the way things should be, you can learn to control yourself. Then you can view information objectively, and choose to behave in a manner that is in your own best interests. You do this by creating rules to trade by, and following them.

Nearly everyone agrees that you need to have rules to be successful in trading, but most traders have no intention of following any. Most people who are interested in trading resist the idea of creating a set of rules. The resistance may be subtle, but it`s still there.

Often this is a response to how we acquired our first set of societal rules. Our parents, relatives, teachers, or friends gave most of the guidelines we live by to us when we were children. These guidelines were taught to us, we did not create them, an important distinction. During this time, many of our natural impulses to move, express, and learn about the nature of our existence through our own direct experiences, were stifled. Some of these impulses were never reconciled, and can still exist inside of us as frustration, or disappointment. The accumulation of these types of feelings can cause a person to resist anything that keeps them from doing whatever they want, whenever they want to.

The very reason most people are attracted to trading, the unlimited freedom of choice and decision making inherent in trading, is the same reason they feel a natural resistance to rules and boundaries. The need for rules may make perfect sense, but it`s difficult to generate any enthusiasm for these rules when you`ve been trying to break free of them most of your life. It usually takes a great deal of effort to break down a traders resistance to establishing and abiding by a trading regime that is organized, consistent, and reflects prudent money management guidelines. But, once they do, the possibilities for attaining consistent trading success are limitless.

About The Author
David Jenyns is recognized as the leading expert when it comes to designing profitable forex trading systems.
Discover the "secret formula" of trading that anyone can use to consistently generate BIG profits from the market by downloading your FREE copy of David's new Ultimate Forex Trading Systems course.
Click Here To Download ==> Forex Trading Systems http://www.ultimate-trading-systems.com/forex.html

Winning at Stock Trading

The world of trading and investment can be as frustrating as it can be rewarding! You need to be prepared...

Firstly, decide if you are a trader or an investor.

An investor is someone who enters the stock market inadvertently - usually via their superannuation policies. A trader is someone who makes a decision to buy and sell shares via the stock market. This can be done online or by using the services of a stock broker.

If you decide to become a trader - to win - you must have a survival strategy...

You need to study the market yourself - not just rely on 'reading the news', or listening to others advice and tips.

Take advantage of technology - computers, software, electronic data - all at your finger tips. Seek out charting software and appropriate internet sites - they are plentiful.

Ensure that you 'manage' your money and keep some in reserve.

Have the ability to quickly identify failures as well as successes.

Stock Market trading appeals to those who are a little adventurous - rather than just placing their capital into bricks and mortar.

But - be mindful that portfolio values are less stable than real estate as they are continually moving up and down.

However - investing in the Stock Market means that you are putting your money to work - be aware, and enjoy the gains!

About The Author

Gay Redmile is the webmaster of several finance and investment sites. Having been a trader for most of her adult life she understand the importance of research and fully understanding the market. For further information visit her site at http://www.thestocktradingsite.com.