There are many things to think about when purchasing a stock. Here is a checklist that is helpfull to many beginning traders, it is essential for penny stocks and has been internalized by many professional traders. By no means does this list encompass all rules a beginning trader needs to know.
Plan your trade and then trade your plan: know why you purchased the stock and if the stock is not following your plan it is probably time to exit.
Why are you buying THIS stock. Look at a chart is an entry at this point a good idea.
Is the stock worth buying at this price.
What are you buying. This is easy if your buying Google, in penny stocks its much more difficult. You must read the filings, read about the company in press releases or their website and do a search on their CEO or other main players using any search engine.
Call the transfer agent and confirm the outstanding and authorized shares.
Check for dilution. This is tougher with a pink sheet stock you can contact the state and the transfer agent. More on both dilution and e-mail to each state here.
Again, plan your trade and trade your plan, its easier said than done. You dont want to be riding a stock downhill.
If your uncertain of what some of these terms mean please visit our glossary. If you are unsure about charting we will be posting some basic charting techniques soon. Until then you may want to study a book or two.