Everyone wants to know how to find the best stocks to invest in. And micro-cap stocks are no different.
The first step is to understand what these stocks are. The ‘cap’ part of the name is short for capitalization, and the companies which have micro-cap stocks are those which are not high in value. They are marked by a low volume of assets overall, so this is something worth noting that you should look for.
So which ones should you invest in and which ones should you avoid?
It is unwise to invest in these stocks unless you are familiar with the market. Because the companies have fewer assets they are traditionally riskier than other more expensive stocks. There are websites which list the latest best results in the micro-cap market, and watching to see which names come up at the top time and time again will help you find the best ones.
You need to look in the OTC market for starters. This stands for ‘over the counter’, which is the method by which most micro-cap stocks are traded. The best places to look in for micro-cap stock information are the over the counter bulletin boards. You can look these up by searching for them under their shortened name, OTCBB. OTCBB.com is the best place to visit. The Pink Sheets are another good place to look for information and the most up to date stocks.
But once again the key element in finding the best stocks is research. Get to know the companies that are trading in micro-cap stocks and find out more about them. The fact that many of them have fewer assets gives them less of a cushion to protect them if they should run into any problems. So with that in mind you must accept that there is a high degree of risk in trading these stocks.
That does not mean that every company is a huge risk though. Look for press releases and as much other information as you can find for these micro-cap stocks. Have they performed well recently and show signs of continuing to do so, or has the good period slowed down?
Practice your trading first before putting any firm money down on a stock. Practice accounts give you the chance to trade without risking your cash, and they will also help you to find the best micro-cap stocks to invest in for real.