The Penny Stock Trading System:
Content Examples – from “The Penny Stock Trading System” by Donny Lowy:
Why penny stocks?
“While there are many different types of investing one can partake of the author believes that micro cap investing is the most rewarding one. Micro cap investing has the potential to yield huge gains in a short period of time. It is very common for penny stocks to move upwards of 25% in any given day. Keep in mind that the adverse means that they can also move down 25% on any given day. The nature of penny stocks makes them both very rewarding and very dangerous….”
What is a Penny Stock?
“Before we can enter the penny stock arena we have to a clear grasp of what it is we are dealing with.
We need to have a definition of what a penny stock is and where it trades. Without a basic definition of the stocks we will be investing in we will make countless mistakes out of confusion and lack of direction. Like any entrepreneur, an investor must know what the market they are entering is comprised of. She must research it fully and know all the details that pertain to the given business segment she is entering. Before she commits one dollar to her new pursuit she will make sure that she knows everything there is to know about her market cold. We will emulate the entrepreneur by learning everything there is to know about penny stocks and the market they trade in. In order to do so successfully we will analyze the penny stock market from the ground zero.
To start with we need to decide upon a definition of what a penny stock is. Some investors mistakenly assume that a penny stock is a stock that trades for a cent. While there are many stocks that trade for a cent and when traded correctly can yield vast profits, the definition is broader. Some investors consider any stock trading under $5 to be a penny stocks. Those investors seek to avoid stocks they deem to be highly risky. By labelling any stock trading under $5 a penny stock they help separate themselves from what they see as highly risky securities. While both definitions are accurate four our intents and purposes we will define a penny stock as any company trading on the over the counter market. Our definition of a penny stock will eliminate stocks trading under a dollar on the New York Stock Exchange or stocks trading for .50 on the Nasdaq Small Cap market. The reason we will not consider those stocks to be penny stocks is because more often than not a stock trading for under a dollar on one of the larger exchanges will soon be delisted due to dire troubles in its business. A stock trading under a dollar on a major exchange most likely once traded way above that price and now due to either mismanagement or external factors is in financial troubles and headed for bankruptcy. While there is an art to investing in those companies I have found that it is more profitable to invest in companies that are still awaiting their future than companies which have already experienced what the future holds for them and are now in decline…!
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