How To Do Stock Screening Right?

The process of stock screening can be broken down into clear and efficient steps that lead you to new trading and investing opportunities quickly. Here’s how it works:

 

First, you need to capture all the relevant data in the stock screening software. If you’re a fundamental guy obviously you’re going to need the last 5 years of annual financial statements, plus the most recent quarterlies. If you’re a price-oriented trader, you are probably interested in price patterns, candlesticks, or technical indicator studies on a shorter term data population. So you need to pick the data set on which the filter rule will be applied.

 

Second, you need to devise the filtering rules you want to use in your stock screening tool. If you’re a fundamental investor, your rule might look something like this: Tell me all stocks on the Toronto Exchange which have market cap less than 100 million, debt-to-equity ratio less than 2, and average quarterly cash flow growth rate over the last 3 quarters of at least 10%. This screen will select small cap stocks with low leverage and increasing cash flows — a good indicator of financial health. If you’re a technical trader, your rule might be: Tell me all stocks on the Toronto Exchange with closing price less than 50 and greater than 5, which have RSI greater than 50, a rising 50 period moving average, and a 3 day pullback in price. This screen will select all stocks that are in an uptrend, with relatively strong internal strength, but which have had a short term pullback that might be a buying opportunity.

 

Third, you need to be able to drill down and further analyze the stocks that the stock screening application discovered among the entire universe of stocks. As a fundamental investor, you want immediate access to the other financial data for each stock selected by the screen. As a technical trader you want to see the price and volume on a time series chart, with perhaps several additional indicator overlays.

 

Once you’ve done your further drill down and analysis, you can select stocks to trade or invest in. This process should be constantly done to ensure you are always considering the best available opportunities that match your method or strategy. In a nutshell, this is how you do stock screening correctly.

 

For more information you can consult with our experts at Paradigm Capital Management. Paradigm Capital Management employs a disciplined, bottom-up approach when it comes to small cap investing and micro cap funds, with an emphasis on fundamental analysis and extensive management contact.

 

We have the expertise when it comes to small cap investment to achieve your financial goal, contact us at (518) 431-3500
OR visit us here: http://paradigmcapital.com/

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Wicked Schemes To Avoid When Investing In Penny Stocks

Any time there is the potential to make a lot of money, you can bet there is also going to be scam artists trying to scam people. Trading penny stocks can yield very substantial profits over a very short amount of time. However, you have to be careful how you go about it because penny stocks are much more vulnerable to scams since they are not closely regulated by the SEC (Securities Exchange Commission – the federal agency that regulates stocks) and the price is much easier to manipulate than other stocks.

 

Here are the most common penny stock scams:

 

Penny Stock Scam Spam

This is a common variation of the “pump and dump” scheme. Scammers buy up a bunch of stock, usually in a thinly traded company where there is very little information available publicly, and then they hype it (“pump” it) through unsolicited email to people whose email they get from buying a list(s). This hype generates a flurry of trading which quickly raises the price and then they sell it at a significant profit (“dump” it) – believe it or not, they get about a 6% return response! Never EVER buy a stock based on an unsolicited email. It is most assuredly a scam – no matter how cleverly worded.

 

People Pretending To Provide Insider Tips In a Forum

Be really careful with this one. Sometimes this is done by a scammer in a classic “pump and dump” but there are also well-paid consultants hired by companies to hype their stock on forums. They are professionals and they KNOW what they’re doing. They know how to make a story sound believable with fake press releases, etc. They also understand that subtle “slips” (pretending to be accidental) on a forum can be more effective than blatantly promoting a stock.

 

The Short and Distort Scheme

Here’s another fairly common “pump and dump variation. A fraudster first sells short many shares of a stock. Then instead of hyping it, he bad mouths it to get people to dump it in droves and artificially drive the price down so he can make a bundle.

 

Mis-dialed Messages – Wrong Numbers Leaving a “Hot Tip”

The SEC says this is the latest “pump and dump” scheme. This is where you get a message from someone you don’t know leaving a hot stock tip for a friend – they make it sound like they accidentally mis-dialed and accidentally left you the message – BUT it is NO ACCIDENT. Beware of any information you receive in this manner – and there will probably be another variation of this “accident” tomorrow.

 

Free Penny Stock Picks

Anyone who is really good at picking penny stocks isn’t going to give you their best picks – or even good picks – for free. Picking penny stocks is a highly specialized skill that few people can do and it takes a lot of time. Finding a really good penny stock picker is like finding a rare diamond – and they aren’t going to give this information away for free. Free picks are very often “pump and dump” schemes. Beware of any thing “free” in the penny stock world. It could very easily end up costing you most of your investment.

 

Now, Here’s Easiest Way To Make Substantial Profits With Penny Stocks

Find a penny stock picker with an uncanny ability to pick penny stocks. Have them send you their picks with no delay and then follow what they do precisely. This type of service will not be free but if you pick the right service you will easily make your money back many times over.

 

If you want to learn more, then consult with the experts at Paradigm Capital Management. Paradigm Management is a trusted leader in small cap investing and invests in value stocks of companies across all capitalization

Contact at (518) 431-3500 or visit http://www.paradigmcapital.com/

Day-Trading Rules to Trade in Micro Cap Penny Stocks Companies

Micro Cap stock investing is an immediate catching trend in America and in many parts associated with Europe. Along with a small cash investment opportunity as well as a high degree of return on investment, Micro Cap stock companies already have develop into the hot choice pertaining to modern day investors. Micro Cap Penny Stock investment companies provide higher volatility. consequently as a penny stock investor, it is critical that an individual stick to certain golden rules. Here are a few critical guidelines you can stick to while investing in Micro Cap Penny stock companies.

 

Day Trading: Intraday investing of the Micro Cap penny stock is thought to be as the most secure process associated with investment in Micro Cap stock companies. You are recommended to book profits on the day of placing orders. This reduces any opportunity of booking losses on the carry forward orders due to the particular factors that may well be beyond your control.

 

Management Investigation: This is actually yet again extremely important. You will need to perform a comprehensive analysis of the administration of the particular company. This helps an individual fully grasp the foundation associated with the particular Small Cap stock company you are generally inclined to invest in. The balance sheet, along with cash flow statements involving these kinds of Micro Cap stock companies may not appear as good as some of the large cap stocks, nevertheless they have value to offer you by means of reasonable management together with knowledge who can easily guide them to the future level.

 

The Exit Strategy: As a Micro Cap penny stock investor, this is a golden guideline you should keep in mind. Continually know your bail out method prior to you actually enter into a new penny stock company. Also, know when to take profits or even cut your losses prior to you getting into the position. This is usually a very difficult psychological commitment to make.

 

Be Volume Sensitive: Be mindful of the particular number of shares exchanging hands every day. This can significantly affect whether or not you can actually acquire or sell shares. Generating large volume will certainly assist an individual enter as well as get out of your current positions a lot more effortlessly. Look for big volumes on multiple trading days, as a single day of hefty trading can be the particular outcome of a large buyer/seller.

 

The Pump Machine: Build up always plays a purpose, often misguiding an investor in just about any market. Same is the situation with penny stock trading. Anyone should certainly always maintain a check on the particular viability connected with the newsletters issued by different penny stock companies before you choose to invest. The parameters associated with your decision-making is going to change based upon on whether you are usually day trading as well as long term.

 

Learn about how to trade penny stocks, consult with the experts at Paradigm Capital Management in this regard. Our three decades of experience provide an exceptional level of insight that is reflected in our high-conviction portfolios.

Call us 212.364.1830

The Importance of Knowing a Company’s Market Cap Before Investing in It

An investor will measure a company’s performance based on its sales, but he should be aware of its size in terms of the market value. By knowing the market capitalization of a company he can diversify his stock portfolio among different asset classes. Because market cap not only measures the company’s value in the open market, but also give insight into its future performance. So market cap plays a major role in deciding the future and prospects of a company.

 

We can calculate market capitalization by multiplying the per share price of a company with its total number of outstanding shares. This number will give you the total value of the company, or help us to know how much it cost to buy the company in the open market. Most of the investors use market cap to compare the performance of similar sized companies or companies dealing with the same business before making an investment decision. If the per share price of a company is $50 and its total outstanding shares is 100 million, then its market cap will be $5 billion. And when a similar sized company’s per each share cost is $10 and its total outstanding shares is 400 million, and then its market cap will be $4 billion. If we evaluate these two companies, the second company’s market capitalization is higher than the first one and this gives the investor a clear picture about the company’s growth rate, risk, dividends and international exposure. So there can be companies with lower sales but tremendous growth opportunities. Such type of companies will have large market caps and they will become one of the investors’ favorite.

 

Based on the market capitalization companies are categorized into three types. They are small cap, medium cap and large cap.

 

Small cap companies – The companies belonging to this category will usually have a market cap between $150 million to $1 billion. Belonging to small cap category, these companies per share price will be small or total outstanding shares will be relatively small. So they are considered as relative less risky stocks. Some analysts often consider these stocks as good investments due to their low valuation and possibility to grow to a mid cap or large cap stock. If we invest wisely in such type of stocks, which is by making a technical and micro analysis about the company, then we can anticipate good returns. If you can track the hidden gems in the small cap space then it’s a good idea to invest in such stocks, as nothing else can appeal you more.

 

Mid cap companies – The companies that have market capitalization in the range of $1 billion to $10 billion will come under the mid cap category. These companies are considered to have achieved a relative stability in the market and they got ample growth opportunities to come under the large cap category.

 

Large cap stocks – The companies that belong to large cap will have market capitalization above $10 billion. The big boys that come under this category are considered as the safest companies with regular dividend payouts. This category includes many blue-chip companies, oil giants, telecom companies and consumer product kingpins. In the U.S, some companies like AT&T, Johnson & Johnson, P&G and Wal-Mart are perpetual favorites among many investors. If you are ready to play without fear, then increase your stock portfolio with large cap stocks and enjoy great returns.

 

As a good investor, we should always update our information about the companies in which we are planning to invest or already invested. To gather news we always depend on daily newspapers, other than home television and internet. To become a smart and intelligent investor, one should assess the market capitalization of the companies he is going to invest; though understanding the present market conditions is also a key factor in deciding a company’s performance.

 

Read also: Become an Insider and Reduce Risk in Penny Stock Trading