Penny Stocks Success Tips

The stock market is sometimes an investor’s heaven and sometimes their worst nightmare. It is important to understand that penny stocks form a major part of the trading that takes place on Wall Street. Through this article we will be reviewing the various tips that will allow us to get a better insight into identifying the right kind of stocks so that we can succeed. Typically a single share price value of less then five dollars is what we call a penny stock.

The one basic quality of a penny stock is that it is very difficult to predict the price of a stock in the most accurate manner the reason being that the price of penny stocks is considered to be the most unpredictable and the most volatile of all the different kinds of stocks that are traded in the stock market. The price fluctuations that a stock can undergo in a day are vast.

So, once you have decided to buy a stock you also have to go with the fact that these stocks are highly risky and unstable which makes it very important to monitor them closely. Instant decision making and also speedy reflexes are also required when the stock needs to be sold and when you need to buy. Let us have a look at the penny stock trading tips over the next few lines. Firstly, it is very important to understand the background of the company whose stock you are planning to trade. This stock should have a strong base on which you would like to trade.

If the reason why a stock is being priced so high is not clear, in that case it is ideal for you not to invest in such a stock. Another important aspect that needs to be taken into consideration is the volume of the penny stocks that being traded on a daily basis.

If the volume of the stock that is being traded is high and there is strong backing for the price it would be an ideal pick. Another of the penny stock trading tips is that any stock should be reviewed for buying only at low price levels. This is a very important tip that can ensure success while engaging in stock trading.

Averaging out the price at which the stock has been bought. If you have bought a particular stock at a certain price following which you notice that the share price is falling even lower, it is recommended that you buy a couple of more shares at that price. By following this strategy you would be able to average out the buying price of the share. Keeping all these stock trading tips in mind will help you to be successful in trading.

Ten Tips For Betting on The Stock Market

Buying and selling shares through a stockbroker is not the only way to play the stock market. Spread betting allows you to gamble on the movement of indexes, such as the FTSE100, or on the price of individual shares.

The bookmaker quotes you a price for a certain date in the future and you bet on whether the actual share price or index will be higher or lower. You can also gamble on exchange rates and commodities.

Financial spread betting started in the 1970s when investors wanted to speculate on the price of gold without having to find large amounts of money to buy the metal.

As with any form of investment, it is important to be aware of the risks associated with spread betting. Volatile market conditions can bring substantial gains or losses, so bookmakers advise their clients to speculate only with money they can afford to lose.

Is spread betting right for you? And what are the important points to consider?

1. What is a spread bet and how does it work?

You contact the bookmaker and ask for a quote on a particular index or share. For example, you may ask for the FTSE 100 in June. You will then be quoted a spread of, say, 6,870 to 6,880. If you think the market will be lower, you sell points. If you think it will be higher you buy points. You then bet anything upwards of Pounds 2 a point. If the market closed at 7,100 and you had bought at Pounds 5 a point, you would win Pounds 1,100. If it closed at 6,800 you would lose Pounds 350.

2. What advantage do bets have over shares?

You do not pay tax on any winnings and there is no stockbroker’s fee or stamp duty.

You can also spread bet on shares that have yet to float, such as internet firms.

For example, IG Index initially offered 350p-360p for Lastminute.com, but revised the spread sharply upwards when investors bought enthusiastically. At one point the spread was quoted at 620p- 630p before settling back to 570p-580p last week.

The other big advantage is that you can make much more money from rises or falls in share prices.

For example, if a share costs Pounds 10 and you bet Pounds 10 for every penny increase, you would make Pounds 50 for a 5p increase in the share price.

3. What can I bet on apart from shares?

You can speculate on anything from sport to politics. There are a whole range of innovative bets, such as the number of corners in a football match or the number of days that William Hague will remain leader of the Conservative party.

4. How much can I bet at any time?

The minimum bet is typically Pounds 2 a point, but the maximum can run into thousands of pounds a point.

Bookmakers either grant you a line of credit or ask you to deposit money.

5. Is there a limit on how much I can lose?

Bookmakers offer stop-loss facilities for those who want to limit their liabilities. You specify a level at which you want your bet to be closed.

For example, if a spread for a share was 150p-160p, you may choose a stop-loss price of 120p. At Pounds 10 a point, you would lose no more than Pounds 300.

But the bet is automatically finished if the stop-loss price is reached – even if the share or index subsequently recovers. Each bet is also monitored in case potential losses exceed the credit limit or the amount held on deposit. The bookmaker will alert you to any dramatic movement in prices. You can then close your position.

6. What can I do if I see that my bet is losing?

Although you may have bet on a price some way into the future, you can take your profits or cut your losses at any time. You contact the bookmaker, get the current quote and calculate your winnings or losses accordingly.

In the Footsie example, if you saw the market rising, after backing it to fall, you might decide to close your bet early. The bookmaker has in the meantime updated its quote to a spread of 6,910- 6,920.

You close the bet by buying 6,920 at Pounds 5 a point, which means there is a points difference of 6,920-6,870. Your loss, therefore, is Pounds 250. If the market rose dramatically before the end of your bet and you wanted to take your profits before any subsequent fall, you could close the bet at the current price and walk away with your winnings.

7. Will the bookmaker offer me any advice?

No. You have to back your own judgment.

8. Is spread betting suitable for everyone?

The bets can be useful for cautious investors as well as speculators. Someone with money invested in the stock market could bet that the market will fall, effectively insuring their portfolio at its current level.

9. How do bookmakers make their money?

The bookmakers build their profit into the dealing spread. They protect themselves against the risk of losing bets by hedging – buying options to cover potential losses. They claim it makes no financial difference whether people win or lose, so they prefer people to win and keep betting.

10. How do I get started in spread betting?

You contact a spread-betting bookmaker and open an account. Bets are made over the telephone and, increasingly, over the internet. You will receive written notification of every bet you make.

What’s the Best Stock Market Training?

Millions of people want to make money in the stock market and enjoy the riches of making some great investments. And it is possible if you take the right steps. As you can imagine, you’ll need the right stock market training, a little bit of luck and the ability to make good decisions.

Before you start on your journey to beat the market, make sure you know how much time you have to put into it. If you only have an hour or two each week, then you’re not going to be a day trader! If you have hours each day, then you can be a more active trader which may change your strategy.

You should also make a point to pick out what area of the stock market you want to focus on. For example, maybe you want to focus on stocks in the financial industry, or maybe energy stocks.

You could also consider investing in a certain group of stocks such as small-cap or large-cap stocks.

Whatever you decide, it’s a good idea to focus your stock market training so that you can develop a strong knowledge of a certain area. Of course you can change this if you lose interest, or even develop expertise in more area than one in the long-run.

I strongly suggest trying to read stock market related news on a daily basis if possible. You definitely want to keep in touch with the markets so that you have a feel for what’s going on. Make a point to read newspapers, reliable blogs and finance related websites.

I also like to have CNBC or other market related TV channels on in the background if I’m at home. It’s easy to put it on while I’m making dinner or doing other things. Even without giving it your full attention, you will pick up little useful tidbits.

While you’re learning, it’s not a bad idea to invest using a combination of your picks and following the picks of an expert. Of course you’ll want to make sure the person you are following has the right type of background to be making recommendations.

Doing this is another form of learning as usually you will be able to gain insight from the experts picks and see what they look for.

The stock market isn’t a guaranteed way to make money, but if you go about it the right way and get the proper stock market training, you can enjoy some tremendous profits.