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How to succeed in Penny Stocks trading?

Penny stocks experience more jumps and dips than regular shares, which is why it is possible to experience big gains and losses while trading them. The following tips will equip you with the skills necessary to succeed in penny stock trading. For more detail visit here@ http://smallcapfirm.com/<br>

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How to succeed in Penny Stocks trading?

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  1. How to succeed in Penny Stocks trading?

  2. In the world of investments, nothing invokes more excitement and thrill than the words “penny stocks”. But what is a penny stock? According to the Securities Exchange Commission (SEC), a penny stock is a small-cap company whose per share price is $5 or less. It is understandable why many people enjoy penny stock trading considering the price of a penny stock share is far more affordable than that of a blue chip stock. Penny stocks experience more jumps and dips than regular shares, which is why it is possible to experience big gains and losses while trading them.

  3. The following tips will equip you with the skills necessary to succeed in penny stock trading: Use an automatic stock screener: To get some of the best penny stock company picks, use a fundamental stock screener. A screener will filter through companies that are not listed on major stock exchanges. A stock screener will expose you to more penny stock companies than what you will come across on your own. An automated stock screener can help you select stocks based on: • Intrinsic or book value • Earnings, revenue, or growth • Cash flows • Dividends

  4. Rely on Resistance and Support Levels: • Resistance and support levels are analysis techniques used with penny stock trading. • A resistance level is the peak price of a penny stock before it heads back down. • A support level is when the share falls down to a particular price and then jumps back up to a certain level. • When looking at your particular penny stocks, look at its support and resistance levels. • Consider selling before it hits the resistance level and buying when it hits its support level.

  5. Analyze Liquidity: To gauge liquidity, multiply the total number of shares by its price to see how much cash flows through a particular company. A penny stock on a major exchange will have more liquidity than on pink sheets or on Over The Counter Bulletin Board trading. Highly illiquid share that trade only in the hundreds per day usually experience major volatility. To get a fair price, your stock must have enough liquidity. Set limit orders to ensure a maximum share price. This will take some time, but it will fetch you more savings.

  6. Avoid stocks that jump on high volume: Poor performing stocks tend to jump in price during high volume purchases. However these will quickly fall and “correct” in price. What should you do instead? • Purchase stocks that were high in price on increased volume before but have now dropped in volume levels. • Buy stocks listed at support levels on decreasing volume. By implementing the strategies listed above, you can succeed in penny stock trading.

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