Category Archives: penny stocks

Purchasing Penny Stocks Online

Penny Stocks are the companies floating stocks with per share value less than dollar five. There are other terminologies used for Penny Stocks: Pink Sheet stocks, Nano-Stocks or Microcap stock shares. In common sense, the companies having initiating businesses or small businesses issue penny stocks. There are also the chances that the company near the bankruptcy levels also issues these low priced stocks to fetch out some cash. Penny Stocks are risky for purchase because many traders initiate these stocks only for the reason to get money while the company is getting bankrupt or to turn a fraud against people. You can’t expect to invest money in a struggling company and hence, penny stocks are risky for you to begin a right investment.

Online Purchase of Penny Stocks

There are many people who invest in penny stocks without researching about them. These are mainly the losers and get stuck in the hands of dirty stock chasers. You can search from the list of best brokers online and get associated with the best one to make your investments in a right way. Stocks can be purchased with risk, but they can also give you best rewards. Penny Stocks are tough to track and hence, people don’t prefer to purchase them. You need to make sure that the brokerage firm you are choosing is safe and invests your money to your selected stocks.

There are many advantages to purchase penny stocks online and they are really inexpensive (per stock value) that you can take hundreds of them by not spending too much amount. You should diversify your investments in such a way that if you are losing your investments in one company, there should be a recovery meant to get your money on the right track. Once you have decided to invest in penny stocks, there will be an online brokerage company to get through your investments in your desired way. They will charge you a minimal amount for your share purchase and selling and you will be able to go in a right way to purchase the best penny stocks.

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Things you Should Know before Trading Penny Stocks

Things you Should Know before Trading Penny Stocks

Penny Stocks are termed as Risky Stocks and there are very less people who rely on this investment to gauge gains from it. There are many risks involved with these stocks and the main reason is due to the fraudulent companies and scams in Penny Stock world. These scams are due to Pump and Dump strategies involved in the Pink Sheet Stocks.

Penny Stocks are available in great numbers and you have to be strong enough to recognize the worthy stocks to purchase for an appropriate business. They are risky because businesses run in their own way and there are downfall times for companies, which can lead them to high risk zone. The investors associated with these stocks can probably lose a large amount if they are not getting associated with the right company. There are very less companies getting best trading for these penny stocks and usually, you will find 2-3 commendable stocks from 100 to get the best out of your investment.

 

Before you begin with penny stock trading, there should be clarity of finances taken and you should be ready for the big surprises in your investments.

What do you need to know before buying penny stocks?

  • Get all the information about the companies in which you are making investment by checking the financial records, competitiveness and business models. It will enable you to know the potential earnings and risks involved in your investment.
  • After this step, you need to choose the right time to buy the stocks. It is important to buy at lower price and sell at higher rates to attain gains through your investment. Right timing is important in determining your gains or losses in penny stocks market.
  • You can always exit the market, if you are becoming short of money. There should be a fixed limit kept in your mind for investment and you should never exceed it to get safe and secured.

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Penny stock guide Ch. 15-20

CHAPTER 15

HOW TO PICK A Penny Stock BROKER

Now, the question arises is HOW DO I PICK BROKER?

You should first decide whether you want a telephoning broker or he should be an online broker as well. Then next you should find the following factors.

  •   Quality of information
  •  How fast is the execution of trade
  •   The markets available
  •   Costs attached with them
  •   Check how much equities they would pay
  •   Would they provide with CFD’S
  •   How much fees would he charge on the unused cash in your trading account
  •   How much discounts. Penalties will be there on frequent /infrequent trading.

WHAT ARE THE QUESTIONS YOU WILL ASK DISCOUNT BROKERS

How much do they charge for buying and selling shares? Do they have any subscription fees How do they buy and sell shares Do they deal with telephone and internet both? Do they offer trade discounts Do they offer and added services like alerts, dynamic market data etc.

CHAPTER 16

GOLDEN RULES OF BUYING SHARES

9 golden rules of buying shares

1. STICK TO THE RULES- Always remember that the stock prices would go up and down, what is needed is to stick to your strategy which you have planned. Swaying away from the rules would only bring losses.

2. DIVERSIFY — Do not invest all your eggs in one basket; invest in various sectors not just the one which is mining.

3. BUY SHARES THAT SUIT YOUR TRADING CYCLES — if you are buying shares for a long term it definitely wont suit you if you are short term trader and it goes other way also… short term shares wont suit the long term trader as well.

4. KNOW YOUR RISK TOLERNACE — A speculative share has a different risk profile as to out of favor  ” blue chip “.Allocate your capital according to your own risk tolerance and the risk profile of the trade.

5. DON’T RUSH IN — The market will be still there waiting for you when you are ready to trade. Learn about the market before you start trading particularly the new investors. The best way to start is with the PAPER TRADE, so as to learn the basics first.

6. DO NOT GET GREEDY — Don’t think that you will be a millionaire in a day, be practical and not over realistic. Don’t think it’s very easy, as it’s very easy to lose money also in the trade market.

7. ONKY INVEST WHAT YOU CAN AFFORD TO LOSE — if the shares are the cause of your worries then definitely either you have invested in the wrong ones, or you have far too many to handle, so SELL them , nothing in the world d is more important than your peace of mind.

8. NEVER EVER CHASE SHARES — exercise patience, never run behind the shares and purchase beyond your limits, because the time will definitely come when you will be able to buy them within your limits.

9. KEEP ACCURATE UP TO DATE RECORDS- The most important of all, for penalties for not declaring your profits and not paying the capital gains are too much high. So stick to the rules.

CHAPTER 17

STOCK MARKET INVESTING TIPS

What should you do to be successful in the stock market, may be the following tips would help you

HAVE A PLAN

If you want your money to grow, wealth to multiply then the first thing you need is a full proof and solid strategy plan. If your plan is not good then you would just end up fixing your errors.

INVEST REGULARLY

Investment in shares is not a onetime game. You should keep on investing if you want to yield good profits.

LOW COSTS

Frequent trading would definitely add up to costs. Certain fees are always there which you need to pay, but do not indulge yourself into counterproductive things, which ultimately would make you use up your profits too. Best is to stick to the basic low cost transactions.

DO NOT BUY TOO MUCH AT ONCE

Try to buy at a certain amount and a certain period of time, which will give you advantaged of best prices. Hence if you want to invest to do not invest at a time, do it over a time frame of days, weeks or months.

DIVERSIFY

It’s the most important and vital thing to diversify as it would help to minimize the risk. All the types of investment, goes thought the cycle of setbacks ups and downs… hence you should diversify to earn profits in long term.

DO YOUR REASERCH

Before you decide to invest choose the right industry and in that choose the correct company. It would take a little bit of time but, do your homework properly before investing because it’s ultimately your hard earned money you want to invest for betterment.

NO EMOTIONS

The most basic thing of investment is, you have to keep emotions aside what it needs is cool, calm and balanced mind.

KNOW YOURSELF

You should now yourself about the market as well as which stock is good, if you are not able to do that than its always advised to have a professional do it for you .yes, we definitely talked that we should keep our costs low, but in this respect it’s always good to have someone manage your trade if you are ignorant about it,

CHAPTER 18

DIFFERENCE BETWEEN STOCKS AND SHARES

For the first time investors it is difficult to decide where to invest his money .which option to select and when all the information seems to be confusing. In that the most common question asked is what the difference between STOCKS and SHARES is.

In today’s financial market, the distinction between the both is somewhat blurred, however

STOCKS mean ownership of certificates in multiple companies. You may not be only the stockholder but also the shareholder for each particular company as well.

SHARES mean ownership of certificates in a certain company. It makes the person the shareholder of that company.

The common misconception about stocks and shares is that they are different things. In reality they are the same thing but are referred to differently when talking about more than one company.

DIFFERENCE BETWEEN STOCKS AND BONDS

Sometimes it’s difficult for the new investor to differentiate the difference between the two. If I must say so, there are people who have been investing for a long time, but still they have not been able to articulate the difference. People think that stocks are more riskier then bonds and basically it is true also,

STOCK means ownership of certificates in multiple companies. The price to the stocks will actually depend upon the performance of the company. If company is doing well you will share the appreciation, but if the company has gone in loss, then u will equally be sharing the loss.

BONDS are “credit “given by the investor to the company. It’s a kind of loan provided to the company to carry on their activities. The percentage the investor gets is fixed.

The shareholder would stick to the shares even in bad times and would expect that the company would do better in future, but the bondholder is just concerned with his initial amount and the interest from the company.

It is possible that investor has invested in a small and a risky company and if the company shuts down then the bond holder has to lose his initial investment as well, but this happens in a rear case.

So what would be a wise investment BONDS OR STOCKS?

Well. It depends on the person personal decisions and what is his risk tolerance. Though the ideal long term portfolio could be a blend of little bit of both.

CHAPTER 19

FUNDAMENTAL ANALYSIS

It is always been a difficult and a confusing decision as to which stocks to buy. The financial analysts heavily depend to the Fundamental analysis at that time.

Fundamental analysis is looking at the basic or the fundamental financial level. It helps as key to determine the company’s health and gives the idea of the value of its stock. Fundamental analysis is the cornerstone of investing. Its core objective is to do the financial forecast of the company

To conduct companies stock evaluation

To make projections about its business performance

To evaluate its management

To calculate its credit risks.

TECHINCAL ANALYSIS

Technical analysis forecasts the future directions of the prices, through past data and market trend. It ‘ignores’ the actual financial condition of the company, market currency, it just solely goes by the “charts “that is the price and volume information only. It is just not limited to charting but it also considers price trends.

Technical analysts believe that the investors collectively repeat the behaviors of the investors who preceded them. While it will take long time for the technical analyst to be picked as the one to manage your trade, but certain financial institutions and banks are using them as tools.

CHAPTER 20

FAQ ‘S

If I buy, when should I sell?

Stock market is a creature in and of itself. When will the bull market is going to change to bear market is anyone’s guess. Hence, we should hold the shares which are stable and are moving up. When you see the company’s shares you have taken are dropping, dipping continuously, then I guess it is time to abandon the ship from those share, meaning it would be wise to sell those shares which are falling in price.

How many shares should I hold?

If they are fewer the better it is good to be diversified, but you should hold that many share that you can manage, and handle on your own. What is the point of holding 1000 shares and If you cannot know them all… instead it’s better to have 25- 30 which are manageable.

How can I buy and sell my shares tax efficiently?

You will be able to do this inside a self select Isa

Most of the brokers provide you with this facility where they give you an empty Isa wrapper. You have to fill it pound 7000 worth of shares and then trade tax free. All capital gains you make will be tax free.

What are Penny stocks?

There is no set accepted definition for the Penny Stock. Some define it as stock priced under 1$ and some say 5$. They are actually type of stock that generally trades at very low value and market capitalization. They are highly speculative and have high risk due to lack of liquidity. They are generally traded over the counter (OTC) and on pink sheets.

What is buying on margin?

A risky technique where in you are buying stocks with borrowed money from the broker. You can term it as a loan from the broker to buy the stocks. In this it allows the investor to be paid the fractional amount and the rest in borrowed from the broker. The broker sets a margin account with you and also charges you with brokerage on the loan and you have to pay interest as well. They can also hold the shares as collateral against the loan you have taken and can take the stocks, if you become a defaulter.

.

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Penny Stock Guide ch. 10-14

CHAPTER 10

INVESTING

PICKING Penny STOCKS AND PLANNING TRADES

Stock picking in many ways is as good as choosing a spouse for you. There are lots of options available to you if you have money. Once you have decided that you want to invest in shares, the biggest question which comes to the mind is how to I buy stocks? How do I plan my trades?

It is up to you to decide in which category of investors you want to be and which strategy you would follow

GROWTH INVESTING STRATEGY

IF you are kind of optimistic investor, then this strategy is good for you. Here the investor foresees the growth of the company’s earnings and invests in it. This type of strategy is considered to the best for beginners in the stock market.

VALUE INVESTING STRATEGY

Benjamin Graham and David Dodd both professors at Columbia Business School, and professors too many big investors, are known as FATHER of this strategy.

In this strategy, the investors tend to buy stocks whose price has recently fallen and are available at cheap prices. But you have to be careful, value investing does not mean “JUNK “.Investors has to do their homework on the companies, and distinguish between the value company and the companies with declining prices. The company should have its fundamentals healthy to prove its worth.

DIVIDEND INVESTING STRATEGY

In this strategy the investors, buys stocks which pay dividends regularly to them on quarterly or yearly basis… The choice of companies in this strategy should be sound and healthy. This strategy may not be the sexist strategy, but in the long run, this time tested investment strategy would definitely yield returns.

CREATING A STOCK TRADING PLAN

If you want to build your wealth, keep your wealth and grow your wealth you should have a solid Stock Trading Plan .A stock trading plan is a fixed set of rules and actions which formulate your trading strategy. Every trade you do should be governed by your trading plan.

Your trade plan is your road map to tell yourself and affirm yourself and reach your goals.

You will have to consider certain criteria for your plan like,

the timing Price of the stock Current news about the stock Liquidity of the stocks How long to keep the stock i.e. to hold them When to sell the stock What to do when the prices of the stock does not move. Etc

You can think of other aspects as well, but the above is the major point s you have to consider.

Once you have made a plan, mock run of the plan in the stock market which will help you to know if your plan is effective or it needs amendments.

CHAPTER 11

THE MECHANICS — PLACING THE ORDER

STEP 1

OPENING A SHARE DEALING ACCOUNT

Once you have decided that you want to deal in shares, you have to open a standard share dealing account, which usually is free. The basic share dealing account offers certain services for free , that means ” No ADVICE ” they would simply buy or sell as per instructions given. They allow you to trade over the phone or thru internet

If you have opened an account with your broker then you have to send them money stating which and how many shares you want to buy. They would charge you certain brokerage fees for their services. Also few of them charge trading fee, if there is no activity for a certain period of time as inactivity fee.

If you are trading through a web site, then it would ask for a username in which you want to open an account and then a password, that’s it and you are on. Once you put the  username and the password , it would ask you which companies shares you want to buy, how much you want to buy it would then give you a share quote , if acceptable to you .they get their research on the trading charts and

You can always think and come back again. If the quote is acceptable to you u confirms it and in return you will get an email confirmation by the broker and the deal is done.

Yes, it sounds a little tensed but you will get use to it over a period of time.

CHAPTER 12

RESEARCH STOCKS

STEP2

RESEARCH STOCKS

It is very important that you do proper research on the stock because the stock markets behave in weird ways and you should have proper knowledge to it. Never buy the stocks at random, as the market is not random and it works on lots of principles and attributes. If you want to succeed in the stock market you have to do proper research. Either you do the research on your own or you can hire someone to do it for you.

5 VITAL ISSUES

Fundamentals about the company. How is the company doing, is it a profit making company and a sound company. What is the price history of the stocks of that company, i.e. how much are the investors paying for the stocks. Price target is also a vital factor; you have to see how much the investors would pay for the stocks in future. What catalysts would change the investor’s perception of the stock? The most important of all compare the stocks with others in the same industry.

So, to sum up we can say that it’s important that as an investor you should have understanding of wider markets trends, knowledge of individual sectors. Also you should be able to analyze the financial records. You should not be able to have access to rumors and upcoming deals. Last but the most important is No emotional bias, generally this last point is overlooked.

Research before buying the shares; this can be done in many ways,

Go through the TV SHOWS and the newspapers, they have all the details of the shares which are doing well. Take valuable tips from friends and family members who have the knowledge of the subject, Never take any decision in HASTE and do not ignore any ADVICE. Full service brokers also help to do the research, they hire the stock analysts and they in turn find out which would be the ideal stocks purchase for the client. They charge a specific fee for their services. Interviews of the owners, CEO’S, directors etc also are helpful as they normally give the correct synopsis of their company. In today’s world the internet technology has made the things easier for the investors to the research on their fingertips, they can research on trading charts and platforms. Some of these charts are available for free and some have costs attached to it.

It is of very important that you get all relevant and correct information on time so as to grow in the market and make maximum profits. You should be aware of that in the stock trading wrong and unreliable information is very dangerous.

CHAPTER 13

HOW TO READ QUOTES

HOW TO READ SHARE QUOTES IN NEWSPAPERS / INTERNET

Most of the people track their stock trades in the business sections of the newspaper or on the internet. The information provided on the stock table is the most current data available.

The stock table looks something like below

STEP1

Column 1 and 2 are the 52 WEEK High and Low — This is the highest and the lowest price paid for the single stock over the last 52 weeks i.e. one year.

STEP 2

Column 3 is the Companies name and the Type of stock — This column lists the name of the company. If there are no special letters or numbers following the name it is considered to be a common stock, but For example “pf” is return then it means the preferred stock, different symbols imply different types of stocks.

Step 3

Column 4 is the Ticker Symbol (SYM) — This is the unique alphabetic name which identifies the stock issued by the firm. If you are looking for the stocks quotes online you should search for the company by the Ticker Symbol.

STEP 4

Column 5 is the Dividend per Share — This indicated the annual dividend paid for each share, but if the space is blank then the company is not paying any dividends.

STEP5

Column 6 is the Dividend Yield –This is the percentage return on the dividend. Some companies do not pay dividends regularly; the Board of Directors decides how much to pay on quarterly basis calculated on annual dividend of the share divided by the price per share.

STEP 6

Column 7 is the Price/ Earnings Ratio –Mostly commonly known as P/E, this is calculated the current stocks prices by earnings per share from the last 4 quarters. The higher the P/E, the more investors are paying for the company’s potential.

STEP 7

Column 8 is the Trading Volume –The figures shows the total number of shares traded for the day, listed in hundreds. To get the actual number traded add”00″ to the end of the numbers listed or multiply the number in the column by 100

STEP 8

Column 9 and 10 are the Days High and Low — This indicates the maximum and the minimum people have paid for the stock in a day

STEP 9

Column 11 is the Close — The close is the last trading price recorded at the end of the day, i.e. at market close.

STEP 10

Column is 12 is the Net Change — This is the dollar value change in the stock price then the last day’s closing price. If the + (positive) sign indicates rise and a – (negative) sign indicates a drop in the price.

CHAPTER 14

HOW TO BUY SHARES?

We have already discussed this before, but just to refresh it further, in ancient days dealing in trade market was only the privilege of the rich people, but now it is not so a common man is also a part of the trade market.

You can buy shares through any of the following ways

Stock broking through bank, custom stock brokers over the telephone or on line trading through internet.

If you have no idea how to go about investing and really need a lots of help then in that circumstances , you can go for ADVISORY SERVICE , where in the stock broker looks in to you individual account and advises you on buying and selling

But , if you wish to hand over the entire thing to someone else, then in that case you can go for DISCRETIONARY SERVICE, in this there is certain strategy between you and the broker which is agreed upon and the stock broker takes all the decisions of buying and selling on your behalf with your money. This type of service risk factor is more.

You can categorize the brokers in two major types,

Discount brokers – these brokers will collect a certain amount of annual fee form you and will only carry out what has been told to them, over the phone, in person or on the internet.  They would give ZERO advice to you.

Full Service brokers- these brokers give you recommendations and advices on which stocks are good to buy, which will yield profits and which stocks are overvalued. They provided these services with a little higher fees and sometimes even commissions

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Penny Stock Guide Ch. 5-9

CHAPTER 5

STOCKMARKETS

A stock market is a public for trading of the company stock at an agreed price. It is considered the fast way to get the money from an individual and give it to the company that needs it.

The concept of stock trading comes from way back in 1600 , when the East India Company was launched, it needed money from the people for their voyages, without any guarantee of return  .hence they approached the investors to whom they gave shares in return of the cash.

The idea was that the risk would be shared and divided among the investors, no fixed returns would be paid to them but if company progressed and did well then the investors will be benefited. The idea worked and the investors made profits and by the end of 17th century many more were entering the ball game of trade.

In 1801 the LSE (LONDON STOCK EXCHANGE) was formulated, the systems were formulated and there was no looking back after that. LSE also runs AIM (Alternative investment Market) for the young companies as “starter market “

Today, along with Britain, LSE runs the biggest exchange with 1800 + companies, which is called the “main market “.

CHAPTER 6

STOCK EXCHANGES

WHY DO COMPANIES LIST ON THEM?

Stock Exchange is an organization or a corporation which helps in trading of stocks to investors and stock brokers. The main aim of listing the companies on stock exchange could be

Raising Capital for the businesses

Mobilizing Savings for further Investment and

Facilitating Companies Growth

NYSE

The biggest and the most prestigious stock exchange is the NYSE ( NEW YORK STOCK EXCHANGE) .NYSE came in existence way back in 1972 , when 24 New York stockbrokers and merchants  got together

Sign the Buttonwood Agreement.

NYSE is first exchange of its kind and trades in the open outcry system.  Each stock is traded by a specialist (who is the employee of NYSE) on a specific location on the trading floor. This specialist actually works as auctioneer between buyer and the seller in particular stock. This type of trading makes NYSE different from other exchanges which are totally dependent on electronic devices.

Today with changing times half of NYSE is also trading on electronic devices, and is come out of the Stone Age.

NASDAQ

The NASDAQ (NATIONAL ASSOCIATION of SECURITIES DEALERS AUTOMATED QUOTATION) is the second type of exchange and the largest electronic screen based trading market of United States of America. The exchange does not have central locations of specialist, neither do they floor trading. The entire trading is done through computers and telecommunications.

AMEX

The third largest exchange of America is the AMEX (AMERICAN STOCK EXCHANGE), which has been taken over by NASD (parent company of NASDAQ) in 1998.

OTHER EXCHANGES

There are many other stock exchanges around the world. Almost all countries have stock exchanges, with Americas stock exchange being undoubtedly be the largest.

List of other exchanges,

LONDON STOCK EXCHANGE

HONG KON GSTOCK EXCHANCE

MUMBAI STOCK EXCHANGE

JOHENSBURG SECURITIES EXCHANGE

And the list can go on…………

CHAPTER 7

WHAT ARE STOCK INDEXES

A stock market index is a method of measuring a section of stock market. Statistical indicator used in measurement and reporting changes in the market value of group of stocks. By measuring the performance of a one company based on the performance of other companies in the same type of business, which will help the investors to make best investment.

Major types of stock indices:-

There stock indices may classified in many ways.

GLOBAL market index includes all types of companies irrespective of where they are domiciled or traded. The 2 best examples of such index are MSCI WORLD and S&P GLOBAL 100.

NATION market index indicates the performance of a stock exchange of a nation and reflects the economy of the country. The examples of such index are the INDIAN SUNSEX and the JAPANESE NIKKEI 225

More specialized indices comprise of tracking the performance of the certain sector of the market, the example is MORGAN STANLEY BOITECH INDEX, it comprises of 36 American companies under biotechnology industry

Other indexes may track the companies from its size, or a certain type of management etc.

Weighting

The index can be also classified under the criteria as to how is it priced

PRICE WEIGHTED INDEX also known as equal dollar weighted index, each component stock contributes only to its price when determine the overall value. The size of the company or the volume in which its trading is not taken into considerations, hence evens a slight up or down in a single company highly influences the index

CAPITALIZED WEIGHTED INDEX also known as market value weighted index, whose components are weighted according to the total market value of their outstanding shares. The impact of the component’s price change is proportional to the issues overall market value.

CHAPTER 8

HOW DO I BUY AND SELL SHARES?

In ancient days buying and selling stocks/shares was the privilege of the rich , who with the help of certain share brokers use to buy and sell shares and among those few , the ones who had the inside information of the companies use to mint most money.

But the today’s internet age, the entire information is available to the common man, making him pretty much the part of this never ending market. As now most of the information is available on the internet, the stock brokers give their services with no frills attached , meaning you tell them which shares you want to buy or sell and they would do exactly the same , no advice given .

There are big stocks brokers like Barclays, Brennan etc who charge for the service their certain amount of commission for each deal, and also few brokers charge you yearly and quarterly fee just to keep your account open and do the dealing on your behalf.

Investors buy shares only for the purpose of income in forms of dividend, and then they should scrutinize properly and buy such shares that yield the most dividends.

Some investors are not interested in income but are more inclined towards capital growth, hence when the share price increases in anticipation that the company will yield more profits in future and which will affect the increase in the dividend payments… hence investors who are interested in capital growth, should invest in share that are expected to yield huge dividends in future.

CHAPTER 9

WHAT TYPE OF TRADER ARE YOU?

Each individual who is the stock market and is intending to make money has to identify himself from the various trader types he falls into and has to utilize that strategy.

The following are the types of traders,

POSITION TRADERS

Most investors fall in this category, as they buy stocks and hold them for months and years expecting to get more profits out of it. Institutional investors, mutual funds and investment banks are interested in such stocks which yield profits in long term. They concentrate more on the financial strength of the company and not in technicalities.

SWING TRADERS.

These are the traders who look for the fast movement in the market. Fast buying and selling , and in this short term of holding shares these types of traders make lots of wins and losses .They have the fast profit making mentality , they have high risk to reward ratio.

DAY TRADERS.

The stock market moves up and down every day and these types of traders make the most and capture the big portion of the move. He does not believe in keeping the stocks for more period of time like position and swing traders. He uses the stock market as source of income and not investment.

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Penny Stock Introduction Chapters 1-4

Penny Stocks introduction CHAPTER 1

 

Are you bored with the 9 to 5 job? Want something in your life to change instantly? Want your dreams come true. Your dream of relaxing in a big house and there is a flow of money in the form of dividend cheque. Imagine yourself an owner of a business and watch your company grow.

All of this and much more is now possible by owning penny stocks.

In today’s fast moving world , stocks which was always the ball game of the rich and wealthy people , with the trading technologies expanding itself , the market has opened its doors to each and all who wish to own stock.

If you wish to multiply your money and want build wealth then owning stock is the thing for you .But before you take the plunge in this deep sea of stock market ,its vital and important for you understand about the stocks and how they trade. Most people have heard about stocks from friends or often have overheard a conversation, like “oh Mr. Shah, did wonders on the stock market and now is starting a new firm “or “Mr. Patel lost  …XYZ amount in the stock market. Though being a very popular topic of discussion in most of the places, there is a lot of misconception about it. Everything in life is not free so even this money building financial tool also has risk factors in it.

The only way is to educate our self and protect our self by investing the money at the right place.

CHAPTER 2

WHAT ARE STOCKS AND SHARES?

To run a company or a business, you need funds. This capital can either be generated from within or one has to be borrowed from outside. Borrowing the money can always be a very expensive option , what companies do is give a unit of ownership interest in a corporation or a financial asset, which is called a  SHARE  and the person possessing the share is called  SHARE HOLDER.

It does not mean that if a person is SHAREHOLDER he/she gets to make decisions in the day to day operations of the business. They get the equal share in the profits of the business in the form of dividends.

STOCK signifies the ownership on the company’s assets and earnings. So in totality SHARES and STOCKS in today’s financial market mean the same thing.

Normally a layman would buy certain shares and keep it just to earn dividends, where as few investors who want to deal in the stock trading would buy and sell them. The prices of the shares keep on rising and falling, so you should d be prepared to lose your investment anytime.

There are investors in the stock market who have lost their fortune in it and few have billions.

So what is most important before entering into the big well of stock market is to educate yourself properly and learn in which shares to invest which can give you big returns.

CHAPTER 3

TYPES OF STOCKS

There are generally 2 types of Stocks.

COMMON STOCK: A common stock also known as Voting share or an Ordinary share gives the right to the shareholder to vote on the corporate matters .policy and to elect the Board Members. Mostly the companies issue Common stocks. The dividend paid on these stocks is not fixed and would vary. The return on the Common stocks is much higher than in any other investment, but this return are with cost as common stock involves maximum risks. If the company goes bankrupt or chooses to close down Common stock holders are only paid after the preferred shareholders, bondholders and the creditors are paid. The biggest benefit of a common stock is its can be converted in cash, that is can be liquidities very fast.

PREFERED STOCK : A Preferred stock is also known as known as Preference share or Preferred share, is a  higher ranking stock then the Common stock, and its terms are negotiated between the company and the investor. Preferred stock generally does not carry a voting rights but it does carry priority over the Common stock in payment of dividend and upon liquidation. A Preferred stockholder has option to convert his stock to common stock after predetermined dates, which are called CONVERTIBLE PREFERRED SHARES.

CHAPTER 4

WHAT MOVES STOCK PRICES.

Stock prices are directly related to the company’s earnings, but what exactly makes this prices move? There are no hard and fast rules to this. The news report of a specific company would make the investors have more stocks of it or the negative news can make the investors move out of those companies’ holdings by selling them.

The other reason for the market to sway is countries attempt to correct the inflation.  Generally changes the stock prices are affected if the If the country usually higher or lowers the interest rates

According to analyst, amateur investors also can be a reason to move the stock market up and down. Amateur investors out of inexperience normally make decisions on press releases or rumors

The day traders are also considered the major contributor for the ups and downs of the stocks, as they generally deal in huge numbers of stock which affect the stock.

If the companies are able to show that they have met or exceeded their profit margin , the stocks of the company will automatically go up, but if vice a versa .. If company falls short in meeting the profit margin the immediate reaction of the investors would be to sell the stock holdings of that company.

So to conclude, there is no exact reason for the stock prices to move up or down

Success in investing comes not with how and a dash of luck, but with analytical and cool mind.

MARKET TREND: BEAR OR BULL!!!!

Where these names do came from?  Remember bears are sluggish and bulls are forceful. The bull flairs its thorns up when tries to attack its prey and the bear swipes downs, this is metaphorically depicted in the stock market. When the market has trend is upwards it’s said to be a Bull market and Bear market when the trend hits the downward graph.

BULL MARKET

A bull market trend is associated with increasing confidence of the investors, and anticipation of the future rise in the prices which would motivate the investors to buy the stocks. India’s Mumbai Stock Exchange Index, SUNSEX, was in the Bull Run for almost five years from 2003 to 2008.

BEAR MARKET

A Bear market is a steady drop in the stock market over a period of time. It is accompanied by pessimistic approach taken by the investors anticipating future downfall in the prices and hence starts selling the shares. No specific definition is available for the Bear market. But one generally accepted measure is a price decline of 15 % over a two month period of time.

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Penny Stocks CRWE, SAFT, SWY, SGA

Crown Equity Holdings Inc. (CRWE.OB) is a consulting organization which provides and assists small business owners with the knowledge required in taking their company public, and has re-focused its primary vision with its aligned group of independent website divisions to providing media advertising services, as a worldwide online media advertising publisher, dedicated to the distribution of quality branding information, as well as search engine optimization for its clients.

CRWE recently reported that its sales this year have already surpassed $1,000,000.

In addition, CRWE announced that it has launched its crwenewswire.fr website to provide news in France’s native language. Crown Equity Holdings Inc. had previously launched its German website crwenewswire.de and is launching its Canadian website crwenewswire.cn shortly.

“The new website is one step in many towards the company goal of expanding its footprint internationally, ” commented Kenneth Bosket, President and CEO of Crown Equity Holdings Inc. “Our goal for 2010 is to have all CRWE’s clients’ press releases, articles and news content published in every major financial country’s native language, as well as within cities of every state of our country,” stated Mr. Bosket.

For more information about this company please visit http://www.crownequityholdings.com

Safety Insurance Group, Inc. (NASDAQ:SAFT) recently reported second quarter 2010 results. Net income for the quarter was $15.1 million, or $1.00 per diluted share, compared to $15.0 million, or $0.96 per diluted share, for the comparable 2009 period.

Net earned premiums for the quarter increased by $4.8 million, or 3.7%, to $136.1 million from $131.3 million for the comparable 2009 period. The 2010 increase was due to the factors that increased direct written premiums combined with decreases in earned premiums ceded to Commonwealth Automobile Reinsurers and partially offset by decreases in earned premiums assumed from CAR.

Safety Insurance Group, Inc. is the parent of Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company which are Boston, MA, based writers of property and casualty insurance. Safety is a leading writer of personal automobile insurance in Massachusetts.

Safeway Inc. (NYSE:SWY) recently announced today that all Safeway pharmacies in the United States can now administer a new high-dose flu vaccine called Fluzone High-Dose which has been approved by the FDA for use in people 65 years of age and older.

Safeway pharmacies make it easy for everyone to protect themselves by offering flu vaccines on a “walk-in” basis at Safeway, Vons, Pavilions, Carrs, Dominick’s, Genuardi’s, Randalls and Tom Thumb pharmacies while supplies last. Stores that do not have a pharmacy will offer scheduled flu vaccine clinics.

Safeway Inc. is a Fortune 100 company and one of the largest food and drug retailers in North America, based on sales. The company operates 1,712 stores in the United States and western Canada and had annual sales of $40.8 billion in 2009. The company’s common stock is traded on the New York Stock Exchange under the symbol SWY.

Saga Communications, Inc. (NYSE Amex: SGA) recently reported the Company’s net income for the second quarter was $3.7 million ($.87 per fully diluted share) compared to $2.7 million ($0.63 per fully diluted share) for the same period last year.

The Company continues to maintain a solid balance sheet with $18.1 million in cash and certificate of deposit balances. Netting cash and certificate of deposits against outstanding debt, the ratio would be 2.9 times.

Saga Communications utilizes certain financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) to assess its financial performance. Such non-GAAP measures include free cash flow, trailing 12 month consolidated EBITDA, and leverage ratio.

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Penny stock Aluf Holdings, Inc. AHIX

Aluf Holdings, Inc. OTC Ticker symbol AHIX 

The company has market capital of $77,626 and the company focuses on acquisition of the software and technological platforms. This holding company operates with management, acquisition and development of proprietary software. The headquarters of the company are located in Hollywood (Florida). There is strong potential growth with the best business plan designed for the company’s increased stocks. The mission of the individual is to create the appropriate shareholder value by pursuing the new growth opportunities with improved profitability.

The company is committed to maintain dignity, integrity and excellence in the operations of business and professional ideologies. There are best ethics followed in the relationships with shareholders, employees and other providers.

The daily range of these penny stocks is $0.0001 – 0.0002 and average volume of 17,282,573 shares. AHIX began its services in 2017 and hence, the charts are not developed to see the progress. The plans offered by the company are very lucrative and the company has the champions involved in making a strong base.

The company is engaged in new mergers and acquisitions, which increases the scope for the stocks to grow. It even completed all the aspects with due diligence review and commits to carry forwards the activities in the decided time span. The collaboration with TC has average annual revenues of $12.5 million for previous three years. The closing stage was reached with the involvement of best techniques and hard work gathered with cooperation of the company members. The progress of this transaction can improve the ratings and stock price of the company and lead it towards a better level.

Aluf Holdings, Inc. (AHIX) has the major service driven approach for developing and selling the proprietary software. These applications are built for the clients in a customized way. The major strategy is to build up a diverse enterprise software company giving better growth in the business sectors. It has a strong potential for growth with the well organized business plan and a clubbing of the best people in the sector. You can check out the link www.alufinc.com to get all the information in detail.

The comprehensive quotes of AHIX will change with time and it is thought that there will be better scopes for these products in the coming future. The services of application software is required almost in every industry and hence, the scope of Aluf Holdings, Inc. has prospects to grow as well.

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Penny Stocks that offer dividends

There are many penny stocks that offer a good dividend yield with capital appreciation. The higher cash levels at companies, including penny stocks, will drive them to increase their dividend yield over the next decade. This combination of higher dividend yield and an economy that recovers will drive up the price of penny stocks over the next decade. Personally, I would rather put my money in growing penny stocks paying a higher dividend yield than a 10-year U.S. treasury bond paying only two percent with limited upside potential and a huge risk of capital losses.

A completely unique market in penny stocks that pays a dividend yield, outside of the banking and resource sector, is Deer Consumer Products, Inc. (NASDAQ/DEER). Deer makes and sells kitchen appliances. A Chinese design firm, it sells its products in China and overseas. This is an interesting play on the burgeoning Chinese domestic economy. Penny stocks that are in this space might offer significant upside capital appreciation, in addition to the dividend yield, if the Chinese domestic market continues to expand.

Deer also makes and sells products under the “Black & Decker” and “Betty Crocker Kitchen” brands, as well as other private label names. I do like it when penny stocks have multiple customers and are not heavily reliant on one big client. This allows some stability when it comes to earnings visibility and the predictability of the dividend yield. If the forward dividend yield is maintained as stated by the company, then the stock should pay out approximately 5.7%. Trading at 0.65 of book value with a 17.56% profit margin, these are decent fundamentals to begin further research in the stock.

Chart courtesy of www.StockCharts.com

The recent earnings release by the company showed that, for the year 2011, net income rose 31%. The company stated that higher prices and increased Chinese sales were a big part of the increase in income. Penny stocks that are increasing their sales and income are a good place to start, even if you are looking for a dividend yield. The stock did move up sharply following the earnings release, but it has since pulled back.

Deer had revenue of $226.7 million in 2011, compared to $175.8 million in 2010, up 29%. The firm had earnings of $39.8 million in 2011 ($1.18 per share), compared to $30.3 million ($0.90 per share) in the previous year. Approximately 68% of sales came from mainland China. The firm stated its expectations for 2012 of earning $1.37-$1.42 per share. The company expects this based off of $270 million to $290 million in revenue.

In a company press release, chairman and CEO Bill He said: “We believe China remains the world’s largest and fastest growing consumer retail market and has strong domestic demand for small household appliances.”

Penny stocks with exposure to China have been hurt recently, no doubt about it. Even firms that pay a good dividend yield, such as Deer, have been hurt. If we are to believe the CEO of the firm, there was no word of a decrease or suspension in the dividend yield. Obviously, no one can read minds or predict the future, and investing in penny stocks deals a lot with the trust in management.

I usually like investing in penny stocks with some momentum, as other investors signal their intentions in penny stocks with their money. If they like penny stocks, they buy them, and the price starts to form a base from which it moves up. Penny stocks continuing to decline does raise some worry, but if the fundamental results come in as the CEO states, then perhaps this might be a long-term stock worth looking further into. While I’m not advocating buying shares right now, I certainly would keep my eye on this stock.

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6 Ways to Evade Penny Stock Scams

penny stock scams

6 Ways to Evade Penny Stock Scams

In spite of fixed exposure and reporting prerequisites for organizations recorded on the Over-the-Counter (OTC) Bulletin Board as of late, penny stock tricks keep on trapping unwary traders. In the event that you need to abstain from losing your well deserved cash to such tricks, take after these standards.

1. Conduct Extensive Due Diligence

When all is said in done, financial specialists don’t invest enough energy examining a stock before purchasing. While this is a danger when purchasing a blue-chip stock on the Nasdaq or the New York Stock Exchange, it is out and out neglectful to do with penny stocks. The level of due steadiness required to uncover every one of the realities and separate reality from the buildup is much higher with penny stocks than with blue-chip stocks.

Like most speculators, you may feel that you have to act rapidly to get in on a stock before it begins rising and gets excessively costly, however spending a couple of hours looking into a penny stock before purchasing is time well spent. Regardless of the fact that the stock value ascends amid your examination, the extra dollars you spend in purchasing the stock at a higher cost will be more than counterbalanced by the potential misfortunes.

At the very least, your due diligence ought to stretch out to checking administration’s past record and achievements, the organization’s money related articulations, and U.S. Securities and Exchange Commission (SEC) sites to check if the organization is present in its filings and that there are no administrative activities against it.
You ought to likewise do a general online hunt to uncover whatever else—positive or negative—on the organization. You might be astonished at the quantity of warnings that harvest up around your pummel dunk penny stock. Your chances of being taken in by a trick will be altogether diminished in the event that you direct broad due industriousness before putting resources into a penny stock.

As technology has evolved, unscrupulous penny stock promoters have become more creative in their marketing efforts. Stay away from social media sites and bulletin boards that focus on penny stocks. Finally, never ever respond to an e-mailed stock marketing pitch. If despite these precautions, you still receive a hot tip from another source, politely decline the opportunity even if it appears tempting.

2. Figure out how to Spot Hype and Misinformation

Do not get fooled by bullish newsletter reports that pretext as unbiased research. If the newsletter writer is being paid by a promoter to write up a specific company, what are the chances that the ensuing report is going to be objective and highlight the risks of investing in the stock? Similarly, news releases that serve no purpose other than to boost the penny stock should be ignored. In the penny stock world, there’s no such thing as being too cynical.

3. Improved as an Informed Investor

Penny stocks, particularly those that exchange beneath a buck, have an absolute appeal. But instead than committing the beginner error of just taking a gander at the stock value, check the share trading system’s capitalization too. This may give extra bits of knowledge into the stock’s valuation. Concentrating on valuation and portfolio strategies will help you improve as a financial specialist and pay profits over the long haul.

4. Pump and Dump Scam

This extortion happens constantly. Promoters find enthusiasm for a hardly known or obscure stock. Unpracticed financial specialists purchase up the shares, pumping the cost. Once the stock has achieved a specific swelled value, the awful folks offer, or dump, the stock at an immense benefit. Financial specialists are left between a rock and a hard place. These pump-and-dump plans are regularly appropriated through free penny stock pamphlets, where the distributor is paid to list these unpromising and advertised up stocks. On the off chance that you get one of these bulletins, read the fine print on its site. You may see that the organizations or promoters are paying the creator of the bulletin to highlight them.

5. Short-and-Distort

This is the inverse of the pump-and-dump. Con artists utilize short-offer to make a benefit. Shorting works when the financial specialist obtains offers and quickly offers them in the open business sector at a high cost, trusting the organization stock falls so he can later gather up sold shares at a lower cost. He then returns these shares to the loan specialist and nets a benefit. Penny stock con artists short-offer a stock and ensure the stock falls by spreading false and harming bits of gossip about the organization. Speculators hold a losing stock, while short-merchants profit through their short-offering trap.

6. The Guru Scam

You see these online tricks constantly, and individuals are always tricked into agreeing to them. Advertisements more often than not demonstrate to you how the “master” got to be rich through an exceptional “mystery” and obtained materialistic achievement. In the event that somebody names himself a master or guarantees to make you rich, waste that email or envelope. There is no “one-size-fits-all” way to wealth, and surely not in the share trading system.

The Bottom Line

Penny stock tricks still breed, yet you can evade them by leading broad due constancy, avoiding the standard showcasing traps, figuring out how to distinguish buildup and deception and improving as an educated speculator. Despite tightened disclosure and reporting requirements for companies listed in recent years, penny stock scams continue to trap unwary investors. If you want to avoid losing your hard-earned money to such scams, follow these six rules.

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