Penny Stock Picks – Are They Worthy of the Risk?

Article by Matt Morris

Micro cap stocks have turned many regular people into average people with a lot more money. Do you ever wonder what the secret is to finding the next big pick?

Whatever term you prefer to use, whether it be penny stock picks or micro cap stock picks, you probably realize the colossal promise there is. A friend of mine alleged his friend from high school sat at home all day and ate cake since he allegedly hit it big with a microcap. Take that for what it’s worth, but there are a lot of individuals out there who bet on a equity and won in a grand fashion.

Of course the spin side is that many people lose a ton of money by making a bet on cheap equities. The equation of playing micro cap stocks amounts to putting the odds in your support as much as you possibly can, and attempting to diminish your risk as best as you can.

Let’s look at how to place the odds in your favor to capitalize on profit potential before you buy a micro cap equity:

* Spot bullish technical analysis set ups that imply a break to the upside * Check news stories and gauge the confidence portrayed within the news * Distinguish past resistance levels and intend to sell or reduce your position accordingly * Learn the percentage of shorts in the equity you are interested in, the higher the better * Investigate and distinguish forthcoming newsworthy events that could negatively or positively affect share valuations, for instance quarterly earnings release dates or projected dates for announcements on FDA approval of new drugs that have the ability to bring huge profits to small pharma companies.

Now we can look at how to decrease our danger when trading micro cap stocks, since unquestionably there will be some losers:

* Employment of stop loss orders, setting them just below previous support levels can save you an absolute huge amount of cash if the stock goes south fast * Watch news progress concerning earnings power for the company and sell if you find convincing evidence that bearish sentiment will triumph by the time the next quarterly earnings release is out * If your gut tells you to sell you with a small or moderate loss, do it!

If all of this sounds like nonsense to you, I advise that you get a little more customary with micro caps and stocks in general. However don’t think for a minute this stuff is over your head. If you have a burning aspiration to make it big by playing the market, I think you stand an exceptional chance at achieving your dreams. Maybe you just need a little hand holding to get you on the right track.

If you would like to follow some of my micro-cap stock picks, you can sign up at my site free of charge. Some do extremely well for us, we like stocks with big potential in short periods of time. That way we can move on quickly if the pick doesn’t move. It’s an exciting thing to check your trading account and see that your investment has gone up 100 percent or more in just a few days, and that’s what our objective is with each pick.

Hopefully you have a small amount of time available each week to set aside to start a part time endeavor into penny stock trading. It’s really a great deal of fun, even though not all picks are winners.

So to conclude the thoughts posed by the title of this article, I would say that playing these types of equities is most definitely worth the risk if you play your cards right and know what to look for.

About the Author

Written By Matt Morris, Editor of Microcapmillionaires.com the best & most innovative penny stock newsletter. I am one of the few penny-newsletter-guys that do not accept compensation to “pump” penny stocks. Sign up for 3 penny stock recommendations here. Penny and micro cap stock picks are a great way to turn a small amount of cash into a huge one.