How I Pick Penny Stocks
This is not rocket science or brain surgery. It
is probably more complicated, since rockets and brain surgery are pretty much
exact sciences. Stock picking is not always the same. A slew of factors go into
the thought process behind picking the exact stock tickers to play. Here are
most of the factors we consider when picking plays.
Throughout every trading day, we scan the OTC
Markets, NYSE, NASDAQ, and AMEX looking for those stocks under $1.00 that are currently
showing the best percentage gains. We then track them for a day or so to see if
they have any more room in the tank for Northern Movement. Then, of course, we
learn what started to move them to begin with.
Pretend that penny stock picking is comparable
to creating the World we Live In. Look upon the Balance Sheet and the MOMO as
The Money Maker. Does the company have sufficient cash and assets to keep it
afloat for the next year? Remember we’re looking for quick bounces, not
long-term holding. Is it stuffed like a fat pig with too many liabilities, such
as a very heavy debt load? If the Balance Sheet seems reasonably sound, then,
half the work is done.
For the most part at our price point you will
not even see analyst rankings. We do not really give this much weight, but seeing
analysts covering a company does provide some degree of comfort.
It’s always nice to
see institutional ownership; however, we do not give this much weight,
either, except if a brokerage(s) owns a good chunk of a company. This allows us
to think that they would truly want to see this company succeed.
You want the company to be relatively easy to
understand - after all, who needs a mathematics lesson. Is the Stock Ticker in
a hot industry sector? If it's high tech or biotech, do they own any type of proprietary
technology? Do they have any patents? How many patents do they have? How is
their customer base, and how large is it? Then, we read all of their recent
news, which can steer us toward a better vision of their short-term future.
Besides looking into all of the above with
every penny stock potential play, we also look at potential target prices on
all of the picks. However, you will want to choose a target price that feels
good to you.
We suggest selecting four to six stocks - no
need to do it all at once; wade into it. Only pick those that put you ease with
your comfort level. Do not bet all your money on a penny stocks play - also
known as small cap stocks and micro-cap stocks. I recommend only allocating 10%
to 15% of your total investment dollars.
This formula has been good for me since I started
in 2009.
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Hello! Thank you for everything you have done, been following you for a little bit, learning step by step, so I will definitely start with penny stocks, but I don't feel secure to start yet. Could I use the discord server to show my choices and see if they are good ones? Sorry to bother you!
ReplyDeleteKayla, 100% yes, that is what the Discord Chat is for. Look forward to seeing you there.
DeleteThank you for going deep on investing in stocks at a time when new investors are considering mutual funds, alt coin, and bonds.
ReplyDeleteYour welcome Paul, feel free to always reach out with any questions.
DeleteThank you for sharing this information. It is very helpful.
ReplyDeleteCynthia, I'm glad you enjoyed the article. Feel free to reach out with any questions.
DeleteWell, I think this is the most valuable article of all, after all the basic knowledge, it's time to make decisions. Pretty simple explained. This is kind of random field, but then we have stuff like this to make us secure of our movements. Do you still apply this formula?
ReplyDeleteI apply this formula to trading everyday.
DeleteYour analysis and comparison to things in the real world really help me to better understand what I am dealing with. I've never dealt with penny stocks but I'm hoping to be at least proficient in them after learning a bit from this website.
ReplyDeleteI love how you share that you should only invest around 10% to 15% of your total amount in penny stocks. As most of you know penny stocks are incredibly risky and can either bring large gains or enormous losses. It all depends on the right stock. Make sure you look into the company before you invest.
ReplyDeleteI am loving reading over your articles and blog posts about stocks. However, I'm new to stock trading and was wondering if you had an article that outlined all the stock market lingo?
ReplyDeleteYes please! wanted to start the free course and at the beginning I was feeling already lost! A friend told me to learn here to start getting another income but I think the hardest thing is that I don't understand a big part of the lingo!
DeletePicking penny stocks is not an easy task to do. There is so much risk behind it that you need to find a method that works well for you. We're all different types of traders and all need to embrace that.
ReplyDeleteHaha love the humor! indeed looks way more complicated than brain surgery sometimes! But we got many tools in our hands to deal with it.
ReplyDeleteGood system, cool information, very valuable to share, thanks! Will show this to some friends, hope they decide to take the jump.
Hey everyone! I just wanted to share that I've been in the Facebook group for a couple weeks now and have learned so much. If you haven't joined yet I highly suggest checking it out. Thanks so much for everything you do!
ReplyDelete