If you are thinking of investing in penny stocks then it is important to have a set of guidelines that helps you identify the winners from the plethora of options available. While you might be a whiz on the traditional stocks like the Google’s, IBMs and Boeings of this world, penny stocks require a different game plan and whole new mindset.
An Understanding Of The Industry Is Vital
Researching and having a good understanding of the industry sector is vital, often the industry you currently work in has a number of small companies researching a product or service that will revolutionize the way your sector operates so it always pays to look in your own backyard first. However, unlike regular stocks, getting access to the news that pushes the share price up or down isnt always that easy. If Intel releases a revolutionary new microchip then every media company in the world will report it, but if a 5 man R&D company develop a product that could reduce water usage in every household then its unlikely to make the news, despite the potential for there to be a lot of interest from home owners and housing trusts.
Know Where To Find Penny Stock News
Knowing where to find the news is an important first step. You might find it on the company website, it might be on the Twitter account of the company owner, it might even be in a Youtube video where one of company employees gave a speech to an industry seminar. If you happen on a piece of news on an industry blog which quotes the company owner as saying the breakthrough is round the corner and they have a product that would appeal to the mass market then chances are you could be on to a winner.
Penny Stock Newsletters
One method that many people use is to subscribe to penny stock newsletters like the one from Peter Leeds or Penny Stock Psychic. These newsletters have built up a reputation for identifying penny stocks that have the potential to shoot up in the short term. The reasons could be anything from the award of a patent to the granting of a mining license or the announcement of a groundbreaking product which is ready to go to market. The newsletters take care of a lot of the research for you but that doesnt mean you should rely solely on these picks. Conduct your own research in parallel and try to understand why or how the penny stock is a good (or bad) pick. Another highly recommended penny stock alert service is the Penny Stock Prophet. You can read my detailed review at Penny Stock Prophet Review.
Avoid Free Penny Stock Newsletters
Free penny stock newsletters tend to contain poorer and less well researched picks, so be mindful if you choose to start your investing based on a free newsletter. The paid newsletters, while expensive, often have a proven track record with testimonials from subscribers to back up the performances that the trader may claim.