The Ultimate Guide to Buying and Selling Penny Stocks 1
Table of Contents Part One... Introduction to Penny Stocks 3 Penny Stock Basics? 3 Why Trade Penny Stocks? 4 Where Are Penny Stocks Traded? 4 Part Two... How To Find Penny Stocks 5 Are Penny Stocks Risky 5 Part Three... Trading Tips 6 Buying In 6 Keep An Eye On The Stock 6 Limit The Risk 7 Sell To Make A Profit 7 If The Stock Takes A Turn For The Worst 7 Part Four... Penny Stock Brokers 8 Penny Stock Quotes 9 Disclaimer 9 The Ultimate Guide to Buying and Selling Penny Stocks 2
Introduction To Penny Stocks Hello, Welcome to Wall Streets Hottest Stocks "Ultimate Guide to Buying and Selling Penny Stocks". This guide was written to help both new and experienced investors. Trading penny stocks is a great way to make crazy profits really fast. Penny stocks are different than the big blue chip company stocks that everybody knows about. A regular stock move up very slowly and takes time to start seeing any type of movement. These types of stocks are being monitored by Wall Street analysts, hedge funds, mutual funds investment brokers and investors. As you begin trading penny stocks you will discover that it can be very profitable. Before you start trading penny stocks, you should take some time and read this guide a few time before you start investing. Penny Stock Basics What are penny stocks? Many of you probably heard the term penny stocks at one time or another. Many people define penny stocks different ways. Most people believe that penny stocks trade for pennies a share. This is not true. The US government defines "penny stock" a little more extensively. Here is a quote from the SEC website. The term"penny stock" generally refers to low-priced (below $5), speculative securities of very small companies. While penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets, they may also trade on securities exchanges, including foreign securities exchanges. In addition, penny stocks include the securities of certain private companies with no active trading market. Stocks are classified in three different sizes. Large cap stocks are worth more than 50 billion dollars. Mid cap stocks are worth between 10 and 50 billion dollars. Small cap stocks are worth 1.5 to 10 billion dollars and micro cap stocks are worth 50 million to 1.5 billion dollars The Ultimate Guide to Buying and Selling Penny Stocks 3
The term "micro cap stock" is also used to refer to low priced stocks or penny stocks. Penny stocks generally trade in what is referred as the OTC market. Which means Over-the- Counter. The OTC market would include the OTC Bulletin Board and Pink Sheet stocks. Keep in mind that penny stocks are companies that have a market cap below 1.5 billion and a stock price between 0 and 5 dollars. There are many stock with these parameters that we can research so we can make a profit. Why Trade Penny Stock? The reason for trading penny stocks is that they can be very profitable. Penny stocks can jump hundreds and even thousands of percent in one single investment. Check out some of our charts at www.wallstreetshotteststocks.com that have gone up drastically. Not all stocks are going to make these kinds of jumps, but there is still profit to be made on the ones that move up 10 to 90 percent. Penny stocks are not traded as much as mid cap and large cap companies, because of this, penny stocks companies react very well to news and exposure. This is why penny stocks can make some big moves and this is where you can make substantial profits. Where Are Penny Stocks Traded? Penny stocks can be found just about anywhere in the stock market. Many of these stocks trade on the NYSE, NASDAQ, and AMEX. Generally, most penny stocks trade in the Over-the- Counter markets, such as the Nasdaq small cap, OTC Bulletin Board (OTCBB) and Pink Sheets as well. Remember, the OTC and Pink Sheets are not actually exchanges. The difference between the penny stocks that trade on the NYSE, NASDAQ, AMEX is that they meet SEC requirements so they can be listed in those markets. These companies are required to file public disclosures and other information to the SEC. They also need to have a minimum number of share holders, minimum net assets, and total market capitalization. Penny stocks traded on the OTC or Pink Sheets don't meet all the requirements issued by the SEC. Without information on these companies, it is much harder to research them. The Ultimate Guide to Buying and Selling Penny Stocks 4
How To Find Penny Stocks Penny stocks investment can be found anywhere, newspapers, financial magazines, and websites. First you must try to do your own research and get as much information on the company as possible. Even charts are very helpful and informational. Some helpful tools online are Yahoo finance, MSN Money, Pinksheets.com. These tools will help you a lot. Another place to get information on companies is to go their websites. SEC.gov is a good site to find filings on form 10-K, 10-Q and proxy statements from companies. News on recent companies and industries also can be found on Yahoo finance, MSN Money,Bloomberg,S&P,Value Lines industry reports. Here at Wall Streets Hottest Stocks, We do most of the research for you. We sift through thousands of companies, so we can send you newsletters and alerts on companies that are about to run. We pride ourselves, when our subscribers profit. Are Penny Stocks Risky Yes, all stocks are risky; Penny stocks can be very risky. The best way to be a successful investor is to manage your risk. Stocks and particularly penny stocks have the possibility for dramatic gain and also losses. Never invest in any stock unless you can afford the loss of the entire investment. Wall Streets Hottest Stocks nor any of its affiliates are registered investment advisors or broker dealers. The next few pages ahead are some trading tips that will help reduce the risk. The Ultimate Guide to Buying and Selling Penny Stocks 5
Trading Tips Huge profits can be made in this type of market. With fast quick moves, it gives you a chance to make big earnings quickly. The pages ahead will also help you become a smart and successful investor. Buying In First of all you must do your research. If you are one of our subscribers at http://www.wallstreetshotteststocks.com, we already have done most of the research for you. Second you must open our newsletters and alerts we send you through email. You should check your email every day before the market opens so you can get your order in. Make sure you check you spam box because depending on the setting on your computer, it may place the email in the spam box. You can also set our website on internet options icon as an approved site. We hate spam as much as you do. Your name email address will never be sold or given to anyone. A good time to get in is when the market first opens, so you can get in at the best price. Always use a limit order when purchasing stocks. Never use a market order to enter a trade because this allows the market maker to fill your order at whatever price they like. This leaves you vulnerable to getting poor fill orders. Keeping An Eye On The Stock After you buy in, watch the stock as the market opens and see how much selling is going on. The first 15 minutes will give you some type of sign to how the stock will do. You can judge a stock by looking at the average daily volume. If the stock has a 15,000 volume in the first 10 minutes and the average daily is 175,000 and there is no longer any selling going on, this is not a good sign to stay in. If the volume is still moving stay in. If you see a lot of buying and the stock price is not going up, Get out, this is another sign not to stay in. The Ultimate Guide to Buying and Selling Penny Stocks 6
Limit The Risk After you have put your trade order in you should have an exit price in mind in case the stock takes a bad turn. If the stock you purchased goes down 30% and your exit percentage is 30% loss, then get out at that point. Don't think that the stock will come back. Take the loss and be happy that you did not lose the whole investment. Note: If the price of the stock falls below the price on the stock alert we sent out. That is not a good sign. Get Out. It may come back but most of the time it doesn't. Sell To Make A Profit You should also have an exit price determined after you purchased the stock. When you put your order in to buy, you can also put a sell limit order in. So, when the stock hits that price the sell order will take effect and sell the stock for you. Now you have profited from the investment. You do not always have to buy at the low and sell at the high to make a profit. Even 20% and 40% is a good return. Don't expect 500% all the time. Keep in mind that you should also have a trailing stop limit price. This will help protect the profit you already earned. Just say you bought a stock at 12 cents and it went up to 24 cents. You should set you trailing stop limit at 20 cent, so you don't lose all the profits that you already gained if the stock starts to drop. In case The Stock Turns Against You If the stock is doing well and later in the day the stock takes a turn for the worst and starts to drop fast, you want to put in a market order in to sell all your stock. This is the only time you should use a limit order. The limit order you put in at the buy in may not be good because the price may have fallen below the limit price. A market order will help you sell your stock and hang on some of the profits. The Ultimate Guide to Buying and Selling Penny Stocks 7
Penny Stock Brokers There are many online brokerage firms that will allow you to buy and sell penny stocks. You may have to read and sign a bunch of forms and disclaimers. Also many online brokers offer a representative to talk to place trades and answer any account questions. Online brokers tend to be less expensive than those at a full service brokerage firm. If cost on commission is not an issue then you may want to consider a full service firm. Here is a list of firms to get your account started. Charles Schwab www.schwab.com 866-855-9102 Scot trade www.scottrade.com 800-619-7283 E Trade www.etrade.com 800-387-2331 TD Ameritrade www.tdameritrade.com 800-454-9272 Fidelity www.fidelity.com 800-343-3548 Trade King www.tradeking.com 877-495-5464 Firstrade www.firstrade.com 800-869-8800 The Ultimate Guide to Buying and Selling Penny Stocks 8
Penny Stock Quotes Here are some good sites to get stock quotes. nasdaq.com yahoo.com/finance note (quotes are delayed 10-20 minutes) Online brokerage firms should have real time quotes. LEGAL DISCLAIMER: WallStreetsHottestStocks nor any of its affiliates are registered investment advisors or broker dealers. As such WallStreetsHottestStocks does not offer or provide personalized investment advice. Although WSHS employees may answer general customer service questions, they are not licensed under securities laws to address your particular investment situation. Nothing in this report, nor any communication by our employees to you should be considered personalized investment advice. Owners and writers may have positions in the securities that are discussed, however, all associated employees may not engage in any transaction that directly or indirectly competes with the interest or our subscribers. We accept no compensation from any companies mentioned in this book. Past performance is no guarantee of future results. All information is issued solely for information purpose and is not to be construed as an offer to sell or the solicitation of any offer to buy, nor is to be construed as a recommendation to buy, hold or sell any security. All options. analyses and information contained herein are based on sources believed to be reliable and written in good faith, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness,correctness,timelines or appropriateness. Investment recommended in this publication should only be made after consulting with your financial advisor. Any brokers mentioned herein constitute a partial list of available brokers and is for your information only. We do not recommend or endorse any brokers, dealers, or investment advisors. Use this reports bound by the terms of use found on WallSteetsHottestStocks.com The Ultimate Guide to Buying and Selling Penny Stocks 9