Archive for May, 2010

Investing in Penny Stocks

May 24th, 2010

When you begin to look for penny stocks for an investment, there are many decisions to make. Penny stocks are very speculative, which means if you buy the wrong stock at the wrong time, you could lose a lot of money. That being said, there is a lot of money to be made trading speculative stocks. You must do your research, learn how to chart and trust your instincts and knowledge. There is no hoping. Doing this, you may be able to begin making a profit quickly on a relatively small investment.

Finding penny stock to invest in is very difficult. There are thousands of stocks to choose from, how can you find a good company in the right sector, how do you choose just one that will make you money shortly after you buy it. This is where the real work comes in. Using research, scanning tools, stock picking sites and screeners can help you find that one stock that stands out above the rest.

You could use the forums, message boards and bulletin boards to gain your information but you have to weed through a lot of scams and lies. If you wait patiently you may find traders who are really interested in doing research and finding great stocks. You may find good traders but be careful, they may just be using insider information.

There are many ways to do research, you must read all the companies filings, this is cumbersome at first but becomes easier once you know what your looking for.There are also newsletters, subscription services, and stock picking sites that will help you find stocks and ideas of which sectors to buy in. These sites also provide research on their reasoning usually. If you use these types of sites, ensure that they are not being paid by the company, there needs to be a disclaimer after the advice that lets you know if their research is paid for by the company, otherwise called a promotion (these are bad). As you watch and research the penny share market you will become better at finding stocks and making money.

On any given day enter your brokerage account and begin scanning stocks by price, volume and 52 week highs and lows. This will show you what traders are interested in. Don’t just buy, you need to begin research on these companies that you find. Once you get a feel for these moving stocks try trading them, this will be more of a day trading type set up and you should exit your buys as soon as the stock begins to drop in price or slow down in volume.

Ensure you have the right brokerage account, one that charges a flat fee and has some of the tools I described above. Some brokerage accounts charge extra fees for penny stocks and any extra fees will come out of your profit making it harder for your account to be positive at the end of the day. Also you want your brokerage account to have a charting service where you can chart stocks on their movements.

Can I make a living day trading?

May 11th, 2010

Many people make a living day trading and so can you. If you choose to make an attempt at day trading for a living, you must take your trading seriously. Day trading is like owning a business, the work doesn’t begin and end with the market bell. You must put in time and effort.

Stock Trading is not easy, it takes a lot of hard work and long hours to become successful. You must study the stock market thoroughly as a whole, different sectors and various individual stocks. Even though your day trading and may be focused on one particular stock, you must understand the market as a whole and the individual sectors in order to be more accurate with your trades. You should also employ day trading strategies that work for you

You are looking at buying a stock after the market opens and selling it before the market closes. A day trader does not want to risk any changes overnight, a day trader is left with no risk when the markets day is done. You may own the stock for a minute or you may own it all day. It depends on how you want to play the market. Some traders like to scalp each trade for a dime or two, others like to have longer swings within a time period to make their trades while taking in larger gains.

The goal of day trading is to minimize risk and losses while maximizing gains. In order for this type of trading to be profitable you must have a lot of money at risk for each trade. This means take your gains when you get them. Don’t be greedy and look for a little more. It also means selling at a loss quickly in order to keep your losses to a minimum. If you are buying a stock, you are expecting it to go up from the second you purchase it. If it begins to drop in price you need to sell immediately. Every second you hesitate could cost you hundreds of dollars.

It is very important to know technical analysis from three minute charts through yearly charts. You should also have the fastest trading platform possible with all the different charts and tools. With all this information a trader can make a well informed decision. Knowing your stock, the stock market and technical analysis will increase your chances of being successful. In order to make a living day trading, you will need to make profit on the majority of your trades while only taking minimal losses on your mistakes. You will not be able to make money day trading if the majority of your trades are losses. This is also why its important to cut your losses quickly. Letting one mistake run longer than it should while you hope it stops is a bad idea and can be very costly.

If you decide to day trade stocks for a living, ensure you follow these simple rules. I find the toughest part is to sell for a loss when you feel very strongly that the stock will make a strong move up any minute. Not making that sell can you cost you a days or weeks profit. Don’t expect to make it right away and practice trading within the time frame of a day. You will be surprised at how stressful this is but if you can get it right, it also can be very rewarding.

Follow Up to Sell the Market at 11,100

May 6th, 2010

We hope you were listening to our previous blog informing you that the market would pullback here. Stock Blog

That blog was posted on April 14th, today is May 6th and the market is currently down to 9,900 and moving down hard daily. I hope you were able to short from the top and make a nice gain or at least sell some of your stocks to lock in profit and be in a position to re-buy them at a cheaper price.

When we look to be bottoming we will send out a notice. Until then continue to trade the short side with confidence we will all be taking longs here and there but don’t expect them to run as hard and trade them with a short lease.