Penny Stock Investing

By Bo Miller

Small cap stocks, AKA penny stocks make for some good conversation. Many investors have developed the skills needed to profit by trading them and now love them. At the same time many investors do not understand how penny stocks work and end up losing money.

So with some investors winning and some losing how do you know when and how to invest in these so called "penny stocks" to make some some good profits. Well there are several things that profitable investors are doing to cash in on these types of investments. By the end of this article you too will know what is needed to make good money trading penny stocks.

First of all you must find a company that is on the verge of breaking out. It could be that they have developed some sort of new technology that the world cannot live without. Maybe they have increased profit in the last few quarters, their chart may look like a nice bullish upward trend is about to occur. Now we all know these scenairos would create more positive news for a company. However we still must be careful before we pull the trigger and purchase thousands of shares.

The history of a company plays a major role in our decision process. All of the companies that are penny stocks are pretty much "new" companies, not been around very long. Now what we must look at is the management, who they are and what is their background. Have they ever built a company from the ground up and made money for the investors involved? Many companies will place a web video interviewing the CEO's of the company. This is a great tool and will help investors better understand the plans and goals of the company.

Nearly all of the profitable traders follow the tips above, however they are still many that do not have the time to spend hours upon hours searching for all this information. There is a better way, the web is filled with great penny stock newsletters that are FREE. In fact nearly all of the top traders subscribe to several of the best newsletters. - 31876

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