| The world of penny stock day trading is often | | | | about thousands of companies out there offering |
| compared to gambling. | | | | cheap stock. You definitely need experts to do |
| Why? | | | | this for you, and you also need the tools to make |
| Because when you win, you win big. If you lose, | | | | your investment decisions easier. |
| you can lose a whole bunch of money. The | | | | Many people get into day trading penny stocks |
| speculative nature of penny stocks or microcap | | | | for the thrill of making big money in a short |
| trading is well known. Companies that offer cheap | | | | amount of time. While this is totally possible, you |
| stock are not the same companies you'll find in | | | | must also temper your enthusiasm a bit in order |
| the blue chip market. On the contrary, they are | | | | to make good decisions based on factual |
| often very risky investments. | | | | information. |
| The reason why their stock is so cheap is | | | | Here's an example of a typical microcap stock |
| because they are just starting out in business or | | | | trade: |
| they have mismanaged their business and need a | | | | Let's say you find a start up company that's in |
| quick bail out. Selling inexpensive stock is a way to | | | | the software business. They create medical |
| raise some fast cash for their enterprise. | | | | software for hospitals. This sounds like a pretty |
| Determining which small cap stocks are a good | | | | good business to you so you take a look at their |
| buy is very difficult and not for amateur | | | | stock offering. |
| investors. The truth is, most microcap stocks are | | | | You see that they are selling shares at 50 cents a |
| pure junk. It's really common for a novice | | | | piece. So, you decide to buy 500 shares for $250. |
| investor to lose money after being lured into | | | | You sit on the stock for a while then you see |
| buying a cheap stock that is supposed to make | | | | that it starts to go up. It peaks at $3 per share |
| them rich. | | | | and you decide to sell. You've just made a nice |
| Very often, these sure deals are nothing but | | | | $1,250 profit from that one stock. That's a 600% |
| scams that are designed to make the insider | | | | rate of return! |
| stock picking services big money. They count on | | | | This kind of profit is what excites most people |
| your lack of experience and knowledge to make | | | | about small cap stocks, however, if the opposite |
| them rich. | | | | should happen and that stock goes down by even |
| Only about 5% of the small cap market is truly | | | | inches, you'll lose all of your initial investment |
| worth investing in - the rest should be tossed | | | | money. This is why you should never invest |
| aside like yesterday's garbage. | | | | money that you need to pay your bills and buy |
| The good news is that with the right information | | | | food. |
| and guidance, you can make really great profits in | | | | Only invest extra money that you can spare. It's |
| this market. Most smart investors will sign up for | | | | similar to if you were going to Las Vegas for a |
| a newsletter that specializes in penny stock picks. | | | | vacation and you budgeted a certain amount of |
| The reputable newsletters will only analyze the | | | | money to spend on gambling at the casinos. If |
| top 5% of companies that they feel are worth | | | | you lose it, no sweat - it's fun money anyways. |
| putting money on. They will usually recommend | | | | Day trading penny stocks can be looked at in the |
| three to five good picks. You then decide | | | | same way. It's fun and profitable when you win, |
| whether you want to go with their picks or not. | | | | but not so much when you lose. Unfortunately, |
| Another reason why it's a good idea to go with a | | | | many investors gamble with money they shouldn't |
| newsletter is that you can greatly minimize your | | | | be risking and lose it all with one or two bad |
| risk. Wise investing is all about picking more | | | | trades. I know this isn't going to happen to you |
| winners than losers and not putting all your eggs | | | | because you're going to learn how to invest the |
| into one basket. | | | | smart way, and in this topsy turvy market, that's |
| Since you probably have a full-time job, you don't | | | | the only way you'll end up being a winner. |
| have time to spend pouring over endless data | | | | |