There are certain ways to lower the risk factor of investing in this less than $5 stocks. It is important to be extremely judgmental while investing. Most of these stock companies are startup companies and do not have a compelling business plan. One of the most reliable ways is to get enrolled with a newsletter service. There are many such web-based service providers who provide valuable inputs to find out the best penny stocks. Looking at penny stock success stories over the years, it can be easily said that one must look for companies with consistently high volume of traded shares. Consistent trade volume would mean a rate of return that is acceptable. Liquidity is another important aspect to examine before investing. The number of day-to-day trade volume is generally a better indicator of trade worthiness than average trade volume. To be a part of penny stock success stories, one must invest in a company that knows the tricks to earn profits. These companies use their profit to expand their business and this increases the shareholder value. Many startup organizations incur heavy loss and are constantly in the hunt for financiers. The chances of a higher return are much more when an informed decision is made on the basis of thorough research. These stocks are always highly volatile in nature. They can crash down as quickly as it goes up without any hint whatsoever. Therefore, it is a must to have an entry and exit plan which should be followed under all circumstances. It is also advisable not to invest more than 20% of the overall trading capital in the stocks.
It is very easy to get inspired by the several examples of penny stock success stories in the recent years. However, extreme caution is required to emulate their phenomenal success because there is always an equal chance of quickly parting with all the trading capital.
If you want to know how one trade per week really can turn chump change into a massive cash avalanche, visit http://www.thepennystocksfactory.info today.
97.32% of penny stocks are garbage! That's why I alert my subscribers to just one scalding-hot penny stock each week... Learn more at http://www.thepennystocksfactory.info!
Article Source: http://EzineArticles.com/