How Do Successful Day Traders Pick Top Penny Stocks?
Posted On วันพุธที่ 28 เมษายน พ.ศ. 2553 at by smartcomsciFor all your top stock picks you will have to make use of automated software as well as your common sense, more so when you deal with penny stocks. As a trader you need to understand market patterns, technical analysis and many more to find out the market potential of any given stock in the future, that would be worth investing in. Trading in penny stocks is more of an art than science because of its high volatility and unpredictable nature that makes their prices exceedingly erratic which is beyond scientific comprehension. To help you in your effort you have to however take advantage of scientific and mathematical tools to understand current market trends and of near future for any micro stocks, based on similar historical patterns and past results.
It is important to remember that trading is not the same as investing. There is quite a lot of differences in them. It is a fact that 90% of all investing in penny stocks is actually trading, where the investor is on the look out to book profit, the moment it reaches a predestined objective. Since penny stock investments are mostly short term investments, hence it is more or less a form of trading. Whereas all those who are investors are actually interested in the nature of business of the company in whose penny stocks it invests in. They tend to look into the fundamentals of the company, its future as a business house etc.
That is why it is important to ask yourself whether you wish to be purely investor or a trader who simply looks into the trading pattern and trend within the market, without looking into the pros and cons of the business that the penny stock company is involved in. As a trader all you would want is to buy when the stocks are cheap and sell them to book profit when the prices are quite high. This is the same principle that Warren Buffet follows, both as an investor and a traders point of view and you too would do the same somewhat as a day trader for all your top stock picks.
But it is better said than done, since it is certainly not all that easy to investigate all the factors that affect technical analysis and match them with past chart patterns for a good number of hot penny stocks. Since the price of penny stocks costs few cents to $5 only, they are very cheap to buy in large volumes for prospective trading. Hence they are the most sensitive amongst all sorts of stocks traded in the market and is easily vulnerable to a slight shift in market sentiments. That is why penny stocks are most prone to swing either way, positive or negative. So at one moment you would be surprised to find the prices doubling or trebling overnight or it could simply be plunging to great depths, spinning beyond control.
That is why successful day traders are extensively using automated software for research and analysis to find what all factors have a strong influence for all those overlaps that one sees between a current stock and those in the past by a similar stock. On top of that there are excellent newsletters that draw your attention to those penny stocks considered hot and trendy. Based on the information you may carry out your own research with the help of software to find which amongst the stocks would be your choice for top penny stocks congenial for investments.
This is one great advantage that modern computer savvy day traders have over their past counterparts. Where as it is possible to make your own research it is not physically and mentally possible to wade through vast data inputs to analyse thousands of micro stocks with the objective of choosing the best and the top rated penny stocks.
It is important to remember that trading is not the same as investing. There is quite a lot of differences in them. It is a fact that 90% of all investing in penny stocks is actually trading, where the investor is on the look out to book profit, the moment it reaches a predestined objective. Since penny stock investments are mostly short term investments, hence it is more or less a form of trading. Whereas all those who are investors are actually interested in the nature of business of the company in whose penny stocks it invests in. They tend to look into the fundamentals of the company, its future as a business house etc.
That is why it is important to ask yourself whether you wish to be purely investor or a trader who simply looks into the trading pattern and trend within the market, without looking into the pros and cons of the business that the penny stock company is involved in. As a trader all you would want is to buy when the stocks are cheap and sell them to book profit when the prices are quite high. This is the same principle that Warren Buffet follows, both as an investor and a traders point of view and you too would do the same somewhat as a day trader for all your top stock picks.
But it is better said than done, since it is certainly not all that easy to investigate all the factors that affect technical analysis and match them with past chart patterns for a good number of hot penny stocks. Since the price of penny stocks costs few cents to $5 only, they are very cheap to buy in large volumes for prospective trading. Hence they are the most sensitive amongst all sorts of stocks traded in the market and is easily vulnerable to a slight shift in market sentiments. That is why penny stocks are most prone to swing either way, positive or negative. So at one moment you would be surprised to find the prices doubling or trebling overnight or it could simply be plunging to great depths, spinning beyond control.
That is why successful day traders are extensively using automated software for research and analysis to find what all factors have a strong influence for all those overlaps that one sees between a current stock and those in the past by a similar stock. On top of that there are excellent newsletters that draw your attention to those penny stocks considered hot and trendy. Based on the information you may carry out your own research with the help of software to find which amongst the stocks would be your choice for top penny stocks congenial for investments.
This is one great advantage that modern computer savvy day traders have over their past counterparts. Where as it is possible to make your own research it is not physically and mentally possible to wade through vast data inputs to analyse thousands of micro stocks with the objective of choosing the best and the top rated penny stocks.
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