The first thing that should be mentioned here is what penny stocks are. Penny stocks are those stocks that are low in price. In the initial times penny stocks did not have too much of reputation. But now people understand that since there is less risk involved and the scope of returns is high people are investing in penny stocks. In normal terms, penny stocks are not different from normal stocks. They are traded in the same way as other stocks. But since the price that such a stock holds is quite low, there are chances that the stock’s price would raise to a greater extent. Sometimes a penny stock would rise to above 50 percent also in a day. This is the charm of penny stock.
Who should trade in penny stock?
Anyone, you, I or any other person can trade in penny stocks. But the only condition is that you need to have proper education and knowledge about that particular penny stock you are dealing in. There are many penny stocks in the stock market. But which are the best penny stocks, this selection would make whole lot of difference. A large capital item would take 3-4 months to rise to the extent of 20-25 percent. Whereas, a penny stock would create a record as far as the rise is concerned. This is the biggest advantage. Thus, if you enter into a penny stock at the right time you can earn a good deal of money. Now you will ask that what the right time is. Well, you will need a team which can guide you and educate you about which stock to deal in and why. Also such a team would guide you as to what the right time of entry and exit. There are some really good companies that would help you to select good penny stocks. Penny stocks to Watch, is one such example.
Importance of technical analysis
While you wish to trade or invest you hard earned money in penny stocks you need to know the power of technical analysis. Technical analysis is a study of chart wherein a stock is studied and the ups and downs are recorded. Technical analysis is a deep study and it is not everyone’s cup of tea. One needs to know the loop holes of the stock market and the entry exit game. Only then winning is possible in the market. Since you don’t have that much of time and expertise to take up technical analysis of stocks it would be better to rely on someone knowledgeable who can guide you as to which are the best penny stocks.
Apart from technical analysis what is required to find good penny stocks is to read the balance sheet of such companies, to scan the situation and condition of the market, to study the business of the stock you wish to deal into, to track the company in sync with the current market scene etc. If you don’t have that time, you can allot this job to an expert.