This article contains top secret tips to picking hot penny stocks, to help you get better results than others out there.
Okay, what we’re going to do here is start with a good example just to get you guys thinking for a second before we go deeper.
I want you to remember the movie “The Wolf of Wallstreet”.
Remember the scene where the main character is being told by the seedy stock broker that pink sheet stocks are garbage?
Remember he tells the main character that only schmucks purchase them and they believe they’ll get rich by doing so?
Remember how he was told that his commission would be 50% on selling these?
Well if you saw the movie you saw how things went…
The main character ended up focusing entirely on pink sheet stocks, otherwise known as penny stocks, and turned it into a very lucrative business.
There are also many people all over the world who have turned this into big business.
And yes, it’s one of the smart business ideas for women and even men who want to make money.
Now what we want to do is address the points just mentioned…
First Question To Ask About Picking Hot Penny Stocks
Are penny stocks garbage?
Yes, that’s the obvious first question most people ask.
The answer is that some of them certainly are.
That’s the name of the game though.
Even making money online can be garbage if you don’t know what you are doing.
Same with penny stocks.
Penny stocks are based on small companies that really are still in the growth stages.
I think a better example to give you guys would be thinking of them as maidens in a horse race.
Maiden horse races are horses that have yet to win a single race.
In these types of races a horse doesn’t have an established class. Because of this they usually go off at high odds, even the favorite.
And here’s the thing – in a given field you can have your next Triple Crown winner or a winner of several big easy money stakes races.
Penny stocks are similar.
The hedge to you is the fact that they don’t cost anything.
Penny stocks are literally pennies a share. Sometimes it can be more, but they tend to be less than a dollar and know more than a few dollars tops on the high end.
You have to purchase them in 100 lot increments though.
Can You Get Rich From Picking Hot Penny Stocks?
The next obvious question is…
Can you get rich from these?
The answer is hell yes… if you understand what you’re doing.
Penny stocks, because they’re so cheap, tend to be very volatile.
Here’s an example…
You can purchase a penny stock that sells for $0.08 a share. In a day or two it can go up to $0.20 a share.
Note that the jump is small, but this would still be over a 100% return on your investment.
100% ROI is definitely making money fast, no matter how small, don’t you agree?
Now if you hold onto this, it can go back down to the original price or even lower.
A $0.04 drop from the original price means that you would lose half of your money.
Truth About Picking Hot Penny Stocks
The truth is that penny stocks can be a lot of fun for the small investor who likes things that are really speculative.
The type of investor that enjoys using the best investment apps and putting in some time to do good research in order to see it pay off.
These types of stocks are good for the investor that doesn’t mind losing money, because the front end risk is so small overall.
But forget about losing money.
We feel if you look at penny stocks the right way and utilize the right tips, then you can go a long way and make serious money.
Important Warnings About Penny Stocks
One word of warning we want to give you in advance though is not to play with money you can’t afford to lose.
As stated before penny stocks are very volatile, so it’s wise to get into this if you have some free money lying around that you want to put in to work for you, long term.
Another word of warning would be for you to not look at penny stocks as a get rich quick method.
Yes, you can get insane return, but this is due to the percentage being higher due to the super low entry points.
Instead, see these as one of the residual income sources you can put to work for you, long term.
Top Secret Tips To Picking Hot Penny Stocks
Now that we’ve gotten all of that out of the way, we now what to focus on some powerful tips you can use in order to be good at investing in them.
We believe these tips are simple in nature, but if taken seriously it will make your experience with penny stocks much more enjoyable and profitable overall.
1. Ignore Hot Tips About a Given Penny Stock
If your goal is to find a hot penny stock, then you’re not the only one. There are many out there just like you.
Remember what we said before and that is that these are very volatile.
So, for the investor who likes volatility they’ll be right at home if they can take the ups and downs.
If you hear any source telling you that a certain penny stock is hot and you should get in right now, then don’t… especially when you desperately need money and can’t afford to lose any.
The main reason why is because just like regular stocks these stocks can shoot up off of information.
In fact this form of manipulation takes place a lot and you don’t want to be on the wrong end of it.
Having a good information source is not bad, but you don’t want to be sold on having the chance to get rich off of a single stock.
You’d be buying into hype, excitement and the streets are littered with the corpses of those who didn’t know any better in this regard.
2. Look For Penny Stocks That Are Based On Strong Ideas
Idea investing can be very lucrative for the person who takes it seriously, especially as regards these types of stocks.
Penny stocks often don’t have any information on them or very little. It’s like the maiden claiming horse races we spoke of earlier.
Seeing as how there’s little information available, if you can uncover even just a little and determine if the idea is strong that a penny stock is based on, then you might have a real winner on hand.
A strong idea would be one where you can truly see it working.
Maybe it’s based on a need or you feel like there’s already a company that exists where they’d acquire said company if it got big enough or successful enough.
For example when PayPal started, it was a novel and new idea that many others hadn’t thought of before.
Today, PayPal is worth billions of dollars.
You being able to uncover even the smallest pieces of information can provide you with a serious investment edge on the next hot penny stock.
3. Try To Find A Penny Stock That Has A High Sell Volume
If a penny stock isn’t doing so well and you see that a lot of people are selling it off, then what’s wrong with taking a shot that it might rebound?
This is done all the time with regular stocks or what are called blue chip stocks.
You want your risk to be even lower than it already is.
If I see that a penny stock was selling for $0.30 and now a few weeks later I can get it for $0.11 then I’m inclined to take a chance on that stock.
Knowing things like these and acting when you should is one of the really creative ways to make money, whether with penny stocks or other ventures.
Remember what I said about information, even a little of it making these types of stocks shoot up or shoot down.
Knowing that the stock has already lost about two thirds of its value means that two thirds of risk I avoided.
I’m not going to lose two thirds of the higher amount.
I’m willing to risk losing a little less of the lesser amount though.
If that penny stock goes back up even a few cents I can easily make 50% on my investment.
I would then sell that baby super-fast in order to lock the profit in.
4. Stay Away From “Too Good To Be True” Info
Yes, stay away from any information provided by underlying company that’s just too good to be true.
Understand that these small companies are trying to raise money in order to stay in business.
Getting people to purchase the stocks is very beneficial for them, which means that some might take measures in order to create the impression things are going better than what they really are.
You wouldn’t be getting in on the next hot penny stock, but a stock that’s likely to fall drastically in very short fashion.
I would say to focus on penny stocks where there’s very little if any information coming from the company itself.
These can sometimes be companies that are trying to hide the good, because it wouldn’t be beneficial for them.
You have insiders who would benefit from any real good information.
So when you don’t see any coming out from the company, then you might have something.
Also See: What Is A Notary and How To Make Money As One.
5. Carefully Research Penny Stocks With High Daily Trading Volume
When we say high daily trading volume we’re talking about penny stocks that do at least close to 100,000 shares a day in trades.
The reason you would want to focus on these is because you have a much higher chance of uncovering information using your own research than if you go with a stock where the daily trading volume is low.
Not only this, but what would be the good of getting in on the next hot stock if you’re going to have a hard time getting out of the position.
Penny stocks that do low daily trading volume are tougher to get out of then those with higher volume.
The downside is those higher volume options typically will cost more money than the lower trading volume options.
6. Find Penny Stocks With Decent Degree Of Consistent Good Earnings
The question with this one becomes… how do you determine consistent?
We focus on the low, medium, high approach.
Maybe a penny stock didn’t do too well on a strong consistent basis, but it earned steadily over the course of the past few months.
You wouldn’t want the earnings to be too good, because chances are the cost to get in will be higher and you could always be getting in at the wrong time.
What you want though are steady enough earnings.
You don’t want them to be too high or too consistent; because what you’re hoping for is that you’ll get in when the breakout does take place.
If you manage to get in on a penny stock and it experiences a breakout in earnings, then you’re going to make a lot of money… and fast.
Back to the maiden claiming horse race example again.
Think of it as the horse that has run decent, but always finished well beaten in the end.
Such a horse could be going off at double digit odds when it should be way less.
There’s value to be had and that’s what you want.
Penny stocks work the same way.
You want to get in when you feel there’s value to be had.
7. Look For Large Swings In The Daily Trading Volume Of A Penny Stock
Now this might seem simple, but of course it’s not because if it were then you would have lots of people who could come in and make money.
You have to be very strategic about this.
What you want to do is monitor the daily trading volume of a penny stock.
Look for large sudden increases or decreases.
You would really want it to stand out in terms of what the stock has done in the past.
Now what you would want to do is determine what position you want to take based on why you feel this sudden increase or decrease is happening.
It’s a risk, but it could be a good one if you measure it right.
It essentially becomes a binary decision.
A large sudden increase or decrease is surely going to be followed with a fall or rise, even if it’s not so drastic.
Which side will you be on though?
Yes, this can be a lot of fun, but it certainly isn’t for the faint of heart when it comes to risk.
As you can see, the world of penny stocks is certainly one filled with a lot of landmines if you’re not careful.
Just like other types of investments with business mistakes and other issues.
This doesn’t mean you can’t make a lot of money if you do things the right way.
You certainly can make a lot of money, but you can’t and shouldn’t be greedy.
You can’t look for a shortcut that’s going to get you super high returns in terms of hot tips.
You have to put in some research and exercise superior money management and discipline in order to be successful with these.
Don’t let anyone tell you there’s isn’t money to be made with these types of stocks.
Remember, in cases where someone tell you there isn’t any money in something there usually is.