Daily Winners Stocks
Daily Winners Stocks
Penny stocks — precisely what to look for before you buy
Can you get a lot of money with small caps? Absolutely. However, it’s also possible to lose plenty of cash trading small caps if you’re not very careful. There’s more to making money with small cap stocks than placing a buy order when your favorite magazine suggests buy. Here are some items to check.
Volume:
Most small cap stocks either have simply too much volume, or simply not enough. The greater the daily volume, the smaller the range and the tougher it really is to move the stock higher. On the flip side, if the average daily volume is small, you will find a tough time getting filled. According to VectorVest, the average volume of the 1622 stocks they keep track of which can be listed on the Pink Sheets or OTC BB and where the market cap is less than $1 billion is merely 296 748.
Those that took a position size of $5000, you would need 50 thousand shares. Using the average daily volume listed previously, it is not an issue. On the other hand, as with any averages, you will need to look closer. If we narrow the list by stocks that trade less than 50 000 shares per day, we find that merely 19% of stocks are still left. Only 12% of small caps have volume more than 100 000.
Let me go over it another way – average $$ volume. This factors in what amount your $5000 can acquire. If your hot small cap stock is trading at $1, you’ll need an average of at least 5000 shares trades per day to have at least some liquidity. When it trades for $0.10, then you’ll need 50 000 shares traded daily. For a $0.01, you will require 500 000 shares per day.
As we seek out stocks who trade over $5000 average dollar volume per day, we are left with 419 left. If we really wish for twice the liquidity, only 332 stocks can give you an average of more than $10 thousand exchanged daily.
That without doubt filters out the majority of tradeable stocks.
Greed
Chances of earning money investing penny stocks is certainly against you. The majority of people purchase small cap stocks supported by greed : the hopes of finding the top winners and making a bundle. From the 357 stocks that started out the current year with at least $10 000 average price volume, 125 have been profitable, 228 were unprofitable. The average ROI was -7.86% YTD this year vs a return of 5.33% for the S&P500.
Never anticipate to generate a bundle. Nonetheless, to put the percentages in your favor, think about the following:
Exits
Comply with an exit plan. Whenever these stocks decline, they drop fast. When the trade goes against you, get out.
Market Timing
Should the common market is going lower, dont buy and sell penny stocks.
Growth Rates
Find stocks where the growth rate continues to move at a clip of at least 15%. In addition, consider meaningful growth in earnings per share of at least 15%.
Don’t Commit Money You Cant Afford To Lose
If you cannot afford to drop $500, do not trade in penny stocks. Because you might get away with getting a few shares of a large cap in time, you might need to maintain losses buying and selling small caps.
The odds of getting money buying and selling penny stocks are loaded in opposition to you. Even so, a good trader is able to filter out the losers just before he has even invested in the stock. Before you think about the next hot stock, do your homework initially. In case the business keeps growing, is profitable and has volume, you raise your odds of success.
Checklist: rise in average volume of the last twenty days must increse not less than 100%, have earnings > 15%, rate of growth > 15% and will have to reach a new 26 week high. In 2011 YTD, its returned 26%.
Stock Market Winners in a Bear Market [FOX 9-19-2011]
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