Despite the downturn in the markets over the past few years, more and more people are getting into trading small stocks and taking hold of their own future. It is a great idea for every investor to fully understand what they are trading and why and how they are properly diversified. For this reason, many people are looking for penny stock recommendations because they are interested in diversifying even further. By adding micro stocks to your portfolio, you are giving yourself the real opportunity to make some incredible growth over a short period of time.
When you go looking for penny stock tips, you absolutely have to be careful where you get your information from. There are many individuals and small companies on the internet who are using the public interest in these small stocks to give faulty penny stock recommendations, recommendations that only benefit them. Sometimes these are hard to identify, so make sure you follow through with due diligence to avoid getting burned.
Penny shares, in general, do not trade in the pennies. They trade for less than $5.00 per share, and have the ability to move dramatically. They rarely move with the market. So, if the DOW goes up one percent, do not expect your penny share to go up one percent, too. Because there is so little volume and open interest in small cap stocks, they will not move because of the market or market sentiment.
Penny stocks recommendations are necessary in order for you to identify which stocks are about to move or “pop” and why. There has to be a reason. If someone tells you about a stock and cannot give you a legitimate reason as to why it is about to explode, then stay away. Good penny stock recommendations will come to you with the background on the company, what it produces, why it is important, and the real reason behind the changing share value. Perhaps the company is about to be bought out, or maybe they are about to have a drug passed by the FDA. There are many reasons why a penny share will move quickly, but you need to know what they are.
With all investing, you never want to have too much of your cash in one place, so do not get too greedy with penny stocks, but they can make you an awful lot of money quickly if you do it the right way.
To learn more, consult with the experts at Paradigm Capital Management, Inc. a penny stock and hedge fund managing firm. The firm was founded in 1972 and is based in Albany, New York with an additional office in New York City.