Penny Stocks To Watch – My 10 Assumptions

A lot of people are curious about penny stocks and how to figure out which penny stocks to watch.  They have heard a lot of things about them but probably don’t know what to believe… Both pro and con.

So, I thought I’d do a series of short posts about how I figure out the best penny stocks to watch.  In today’s post, I’m going to lay out some base assumptions that I believe about penny stocks.  These assumptions both protect me from loss and empower me to make money… a lot of money.

Penny Stock Selection Assumptions

I believe the following things about penny stocks.  I know that if I deviate from this list of assumptions, I will miss some very profitable opportunities or I may “catch my lunch,” as they say.  That means that I may miss making a lot of money or that I may really mess up and lose a lot of money.

There Are Fabulous Money Making Opportunities In Penny Stocks

Here are my assumptions:

1. Penny stocks are very volatile. In a very short time they can both make and break you.  “Short time” means often in less than a day… Sometimes in less than an hour.
2. Penny stock risk for a specific company’s stock drops rapidly as the amount and quality of research increases for that company,
3. If properly researched, penny stocks carry less risk than stock options.
4. Penny stocks are, as a general rule, short term trades at best.
5. If I can’t EASILY find information about a company it is because the company is not safe for me to trade.  Note: I don’t believe that most small companies (i.e. penny stock level companies) are pump and dump operations or fraudulent.  They are just small but do have a lot of potential.  I can make a lot of money from that potential.
6. If a major advisory service recommends an issue, the issue will move up most of the time for a short time after the recommendation.
7. If a stock sells for less than I paid for it, even for a moment, it is my assumption that I have missed the move or that I was wrong and I should get out of the position.  I treat it a lot like hold’em poker… I’m willing to take several small losses that might later prove to have been profitable to “protect my stack” because I know when I have pocket Aces, I’m probably going to win and win big… if I’m careful.
8. A penny stock move will never do much more than a quick “pop.”
9. If the momentum drops off, the move is dying and I need to get out of the position immediately.
10. Penny stocks permit me to make more money faster and safer than any other security trading vehicle I have at my disposal.

That’s it for today’s post about my assumptions.

My next post will be called “How The Best Penny Stocks Move.”

Check back regularly.

Go, make a fortune today,

Al

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