Penny Stock Investing

Steve Zelin from Zantrio has provided some great guidelines for trading penny stocks and finding the right broker for you without putting your investment at risk. The goal at Zantrio Trading is to bring the world wide group of financially oriented individuals together, to share their valuable financial ideologies. We hope you will enjoy his article and comment below.

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With the massive undertaking of the cleanup for the BP Gulf Oil Spill heating up, investors are looking intensely, although with extreme caution, into penny stocks that provide specialized services to clean up chemicals, such as oil. Savvy investors as well as small, even first time investors seem to be willing to fork over a small amount of disposable cash, to take a chance at that potential, big shot with these penny stocks. With so many websites on the Internet that provide penny stock tips, investors should give serious consideration before utilizing these frequently ruthless, pump and dump schemes however, we are not implying that all of these sites provide bogus or misleading information. Before taking any recommendation from these penny stock tip websites, investors should investigate as to whether the website is being reimbursed for promoting any particular penny stock. Frequently, potential investors will find that these websites are in fact being compensated for promoting a particular penny stock thus; investors should do their own extensive research prior to risking any amount of money on even the most appealing, penny stock tip.

The overall financial and managerial strength of all penny stock companies will vary of course, due diligence is in order. Financials are extremely relevant when considering which penny stock to invest in. Few investors would be willing to risk even a minimal amount of disposable cash in a company that refuses to provide or is unable to provide disclosure to the public markets. Some companies are basically a store front for investors who buy up shares to merely, build the bank account of the management. Seriously, if you have a company with weak financials and the management is serious about trying to build the company, you would think that the focus would be on putting any revenues back into the company instead of management’s bank accounts. Look closely for previous bankruptcy filings reported as these firms should be given extreme consideration prior to making any type of investment in them. Prior bankruptcies tend to increase risk in the investment.

Depending upon your investing strategy, you may want to take into consideration the maximum price a penny stock has ever traded at. Many penny stock investors will make the investment after doing their research and determine their selling price based on historical performance. Investors would not want to make an investment in a penny stock and intend to sell at maybe a dollar when the stock has never traded at that price.

Prior to investing in any penny stock, investors should look deep into the company’s website for information about the company, if one is available. Additionally, do a Google search in an effort to locate additional information from any third parties who have done or do business with the company. Review current and previous news releases from the company. Take the time to compare chart action from dates of news releases. Comparing news versus charting action can give you an overall view of potential interest by investors upon the release of news. Overall, investors need to be prepared to spend a great deal of time performing research. If you do not have the time or do not want to take the time to do your own research, maybe investing in penny stocks is not something you should be doing.

It’s been found that many penny stock companies have subsidiaries’ that they base their success upon and not the actual company. We found this to be somewhat acceptable since, if such subsidiaries were to be bought out for example, the potential is there for sale proceeds to follow through into the penny stock company itself. One thing we recommend avoiding is message boards for penny stocks. Frequently, participants in penny stock message boards are merely trying to pump a stock, because more often than not, information posted is useless.

Investors in penny stocks need to price shop and compare services provided by online brokers who deal in penny stocks. Most investors investing in penny stocks look to trade hundreds of thousands or millions of shares and outrageous transaction fees can be avoided by shopping around for brokers who handle penny stock transactions. While the old phrase of ‘you get what you pay for’ stands true, investors should do extensive research on these brokerage firms as some charge higher transaction rates, than others. It’s actually a good idea for investors to pick up the phone and call a potential broker, to get a verbal response from their customer support department and get a feel for how the company handles potential customers.

So just remember:

•    Beware of pump and dump schemes and message boards
•    Look closely at a firm’s previous bankruptcy filings; it increases investment risk
•    Consider the maximum price a penny stock has ever traded at
•    Price shop and compare services provided by online brokers

Finally, don’t forget to research, research, and research!

Hoping you turn your pennies into dollars,

Steve Zelin, Zantrio.com

About the author:

Zantrio Trading maintains their focus on the popularity and expansion of online trading. A revolutionary website style that provides individuals involved in the global financial markets, one location for all their financially associated needs, at no charge. The goal at Zantrio Trading is to bring the world wide group of financially oriented individuals together, to share their valuable financial ideologies. We provide a premium selection of Free Stock Picks on a daily basis for traders who wish to swing trade, profitably. Up to date and breaking financial news is made available and easily accessible on the website to all visitors, on the World Wide Web. The ground breaking technology utilized by Zantrio Trading will allow all savvy financial individuals the opportunity to seize potentially profitable opportunities, when they happen.