| Nothing could be as lucrative than to trade in | | | | each of these patterns you might at least |
| penny stocks over the counter or OTC for short. | | | | recognize how a penny stock would behave |
| To begin with they are priced ridiculously very low | | | | provided all factors currently in tussle in the |
| costing just few cents or pennies each. In fact | | | | market remains as it is in the next few days |
| such micro stocks that are traded over the | | | | without drastic change in "weather" patterns. |
| counter can never exceed $5 as per the strict | | | | Importance of Fundamental and Technical Analysis |
| SEC guidelines, if it is at all to qualify as penny | | | | So to make your own analysis before taking any |
| stocks. Because they are priced exceedingly low, | | | | decision to invest, it is important that you learn all |
| investors who look forward to make huge | | | | about Fundamental and Technical analysis. Its very |
| fortune by trading in stocks, buy penny stocks in | | | | much like making your choice of a pachyderm or |
| large volumes hoping to trade them for big profits | | | | a horse for investment. If you have to buy an |
| at the right opportune. | | | | elephant you have to learn all about elephants, |
| So for the same price at which you may be able | | | | their eating habits, their work culture, what all |
| to buy one or two stocks of a high priced blue | | | | kinds of work it can be profitably employed, how |
| chip stock you can buy quite a large number of | | | | much return it would give during its working life |
| these penny stocks of two or more small | | | | span after deducting the fixed costs for its |
| companies. Over and above one can even expect | | | | upkeep such as food and health, salary to be paid |
| to see the price doubling up in a day or two, | | | | to a trained mahout (the man who drives the |
| which is simply not possible for mid cap or large | | | | elephant sitting atop), debts to be repaid back etc. |
| cap stocks traded on national stock exchanges | | | | How many babies would it be able to produce |
| such as the NYSE, NASDAQ or AMEX. | | | | during its reproductive period, which could be |
| Undoubtedly anyone wanting to build a huge | | | | further nurtured and trained for future growth |
| fortune say by earning millions in a year or two | | | | and expansion of say lumber jack business, how |
| can only hope to do so by staking their money in | | | | much of the tusks would fetch as ivory cost etc. |
| penny stocks of various small companies having a | | | | How much worthwhile is the timber business |
| capital thats less than $200 million. | | | | where the elephant would be employed, if it would |
| Why Penny Stocks are both Risky as well as | | | | remain stable since timber costs are unpredictable |
| Lucrative for Trading | | | | and many environment conscious countries like |
| Moreover a slight swing in the positive direction | | | | India is switching over to non-wood materials or |
| may raise the value of OTC stocks also called | | | | importing them from Malaysia or Indonesia as |
| micro stocks few hundred times more in a day or | | | | wood is cheaper. Similarly if you buy horse, you |
| two, which is simply unthinkable for large cap | | | | have to understand what purpose is the horse is |
| stocks.This happens because of their high volatility | | | | being purchased, since the horse that may be |
| in their value that may climb either very high or | | | | used in a traditional Indian wedding may not be |
| very low than what its priced currently. Its | | | | suitable for a race horse. The pedigree and type |
| because of this great volatile nature that what | | | | of horse fit to win races etc. My idea on |
| provides the requisite momentum to penny stock | | | | elephants as an example came after I just |
| pricing as trading progresses by the hour. Such | | | | finished watching a TV Animal Planet program on |
| volatility can be so unpredictable many a time that | | | | "swimming elephants" of Andaman and Nicobar |
| it even becomes difficult for a highly seasoned | | | | Islands in the Bay of Bengal in India. |
| trader to comprehend in which direction would the | | | | So you have to find out for each stock what all |
| price actually follow. Its very much like the wind | | | | are the Revenues and Earning, how competent it |
| that can be a breeze or suddenly blow up into a | | | | is vis a vis other companies in the same sector, |
| storm at times or there could be total lull with no | | | | the extent of its debt load, the current and future |
| movement at all. The same is true for penny | | | | demand for such industry in both domestic and |
| stocks too. There could be times when there is | | | | international market, joint ventures or partnership |
| no trading at all and the penny stock has no | | | | with other companies in similar fields, financial |
| takers for months if not years although when | | | | ratios (such as Return on Assets, Debt to Equity, |
| you brought them at a great price, there was | | | | Profit Margin, Return on Equity, Current Ratio |
| tremendous interest and momentum in trading at | | | | etc.), market risks, press reviews and public |
| that time. This alone makes trading in penny | | | | relations, core management competitiveness and |
| stocks so risky from an investment point of view. | | | | integrity, insider trading, buy back plans, |
| In fact penny stocks follow no scientific principles | | | | institutional holdings and if its involved in any |
| that would help you to guess its value at some | | | | serious legal tangles, political policy and influence |
| point of time, like you might do so regarding the | | | | etc. |
| position of stars or comets in the heavens. | | | | Other than able to understanding the health of a |
| However as I have already mentioned if things | | | | penny stock company, it is important that you |
| work out in your favor then perhaps you have a | | | | make a technical analysis of the various chart |
| better chance to win and make a fortune as you | | | | patterns to understand the rise and fall in demand |
| may do so while playing pokers or maybe slot | | | | that has a strong influence over the price of any |
| machines. As part of your planning process you | | | | stock. For this you have to learn the different |
| can choose your own best strategy to suit your | | | | chart patterns and how best you can make a |
| temperament and the constraints of limited | | | | technical analysis of any penny stock so that you |
| resources available at your disposal. What you can | | | | know what to do when the price rises and then |
| adopt best is a defensive tactics to minimize | | | | dips to bottom out say in a cup and handle |
| losses. To do so you have to find stocks of | | | | pattern, or when it breaks through resistance or a |
| those companies that are in business which has | | | | support point. How you can select your entry and |
| substantial demand in the market as well as have | | | | exit points, setting up of stop losses, limiting |
| a great future for growth and expansion. The | | | | losses etc. |
| sectors are perhaps those of Bio stocks, energy | | | | Hedging as a Strategy to Protect your |
| stocks or something niche which has tremendous | | | | Investment |
| potential that you can foresee. You have to scout | | | | There is another way by way of which you can |
| such undervalued stocks that has been missed | | | | protect your investments which is by choosing |
| out by others and invest in them so that you | | | | hedge funds that complement each other, say |
| may cash them when things are ripe. | | | | you buy shares of oil and gas companies as well |
| What all Winning Strategy to Apply for Trading in | | | | as those for transport companies. If the price of |
| OTC Penny Stocks | | | | oil rises then it would be profitable for oil |
| Now as per statistics 95% of investments fail | | | | companies but not those of the transport |
| hence its always best to spread your risks by | | | | companies, or when the oil prices goes down the |
| diversifying as much as you can when trading in | | | | transport companies would be improving their |
| penny stocks of various OTC companies. Even if | | | | revenues. So which other way your investment |
| 95% of your portfolio fail and fall badly at least | | | | remains protected. So accordingly choose your |
| the rest can climb so high in value that it can pay | | | | stocks very carefully for your portfolio, such that |
| you back several hundred times the value of your | | | | even if 3 of the 5 companies fail to deliver, you |
| total investments. Once you recover the initial | | | | can cover up your cost from the gains made by |
| amount invested you can then play with house | | | | the other two. |
| money i.e. with the surplus that you gained in | | | | The Importance of Subscribing to Reliable |
| returns. That is how it is not surprising to find | | | | Information and Newsletters |
| many success stories where investors who | | | | Now as a newcomer its quite easy to be |
| dipped their toes into the stock market by | | | | overwhelmed with such a large number of stocks |
| investing just $200 in various penny stocks were | | | | in the market particularly OTC penny stocks. To |
| able to make hundreds of thousand dollars in a | | | | help you in your effort you would require |
| year. This is what makes trading in OTC and pink | | | | professional help and use of software to help you |
| sheet stocks so lucrative even though penny | | | | with your detailed analysis of each of the penny |
| stocks are risky because of their great volatility. | | | | stocks you target. |
| But that is only one approach to a problem we | | | | For this you will need the service of newsletters |
| have discussed.On the contrary there is no single | | | | since information on OTC stocks are by and large |
| full proof strategy for water tight solutions, in fact | | | | sketchy and you need authentic insider |
| every single solution gives rise to yet another set | | | | information. Unlike stocks listed in national stock |
| of problems that has to be solved. Since it is not | | | | exchanges where details of each of the listed |
| possible to predict what all problems might crop | | | | companies are easily available the same is not |
| up eventually during trading it is best to stick to | | | | true for micro stock companies. Hence you have |
| patterns. The more trading patterns you | | | | to subscribe to authentic newsletters to keep |
| recognize from past history or experience, the | | | | yourself up to date. |
| better would it be for an investor. By analyzing | | | | |