The perfect investor would have a functioning crystal ball. As it is, even the best stock pickers in the market are always guessing to some degree. Keep that in mind as you attempt to pick your stocks, and remember to always start small and test the stockâs performance before you sink more money into it. This exercise may take only a couple of days in the penny stock market because of the incredible speed with which these small stocks are exchanged.
Use roughly 10% of your investment budget to start with, and limit yourself to 6 stocks or less. Rushing will often lose your money. Thoroughly research your target companies. Have they been around for a few years? Stable companies are obviously a better bet; especially with the increasing number of company failures these days, you donât want to buy a stock for cheap only to find out that its price was due to the companyâs imminent collapse.
Picking a penny stock really means picking a good company. Read all of their recent press releases and any information about them in the news. Have they been involved in any scandals? Is their product or service in high demand, and is this demand likely to increase in future markets? Getting in-depth answers, which, for example, you can do by checking the companyâs financial record, will give you as much reassurance about your penny stock investments as you can get without being a psychic.
You can make accurate projections on a handful of stocks if you spend a few hours a week, find and follow them over a few weeks. But what if you do not have any idea who invests in penny stocks, among the thousands that exist today on the market, including the hundreds of penny stocks that are constantly emerging and disappearing in and out of markets all day? What if you had no idea how to analyze and follow each of these stocks to take a decision on who to buy, when to buy, and when you should sell?
Even if you do not know how to analyze stocks, it is not possible for a human being to analyze, trend, and mathematically accurate, statistical projections on thousands of stocks based on their own performance, performance on the competition in each sector, and in respect of the overall market in general, using real-time data on a consistent basis.
But a recent study suggests that investors from all walk of life to take mental shortcuts when it comes to investing, Gurus of Wall Street and investors penny stock it seems, are more likely to buy shares that have newly proposed a name easy to pronounce, such as a pair of researchers at Princeton University.
This is where computers are useful. Investing in penny stocks, when you’re done with the proper research and analysis, may allow a return on investment.
While it is important for us humans to learn how to select penny stocks, it is to our advantage to have the resources of computer software that can help us make better business decisions.