Trading Penny Stocks Series 4

A concern with most traders is that they lack a proper understanding of what makes these securities stand out against the background of the hundreds of thousands different stocks scattered throughout the exchanges. Knowing these stocks,  one must analyze the many levels of research that is conducted by us when identifying these stocks that potentially carry heavy weight to be big winners; as a result, if such research checks out, we are then able to notify YOU.

But here are a couple of factors one should consider before investing in such a volatile market:

1. Sufficient information is made available to the public

Of the many keys to discovering these stocks in the first place is gathering tangible information that solidifies towards positive volatility. This information can be anywhere from a news article released directly from the company such as 8K filings, 10K filings, proxy statements or Form 144s; to sitting down in front of the computer and crunching algorithms all day. Information a company releases to the public is always of great use because they give us a look into the hard stats internally, which help inference possible rises/gains within a foreseeable future. Remember, a company’s track record with their products and shareholders matter a lot; statistically, 100% of the time, the offering of securities to the public are based off of how well they are doing financially and you can’t sell what you don’t advertise, any relative information does exactly that.

2.  Liquidity

When a stock has liquidity, you are able to verify that the company is easily profitable; profitable enough to manipulate the amount a certain security will either gain or lose when being traded, with two other factors in mind: high volume and the stock’s bid-ask spread, as the two are very, closely, interlinked. The bid is the highest price investors are willing to pay for a stock, while the ask would be the lowest price at which any investor is willing to sell the stock. Because these two types of prices must meet in order for a transaction to occur, consistently, a large bid-ask spreads imply a low volume for the stock while consistently a small bid-ask spreads imply a high volume; as a result; more liquidity, also meaning, high volume, is an immediate arrow towards huge gains and since high volume enables a stock to be more “liquid”, it allows the stock price to accelerate higher and higher.

Bottom Line:

These two factors help us in beginning our research at the most basic level, which may seem quite insignificant but are quite frankly, all the time, underestimated. The key takeaway: Information yielded to the public, ultimately determines a major portion of a stock’s liquidity because it comes from the volume which in most cases, is always driving the price either high or low.

Now there are many more, thorough, sophisticated levels or research that is conducted through our team, but these two factors are the foundation from which we begin picking the winners, we send to you.

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Let’s dominate and make money together! Happy Trading!

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