Buying Stocks the Easy Way

When you first start buying stocks on your own, it can be confusing. My suggestion is to keep it simple. Start with a simple strategy. Don’t get involved in options or currency trading. These are high risk activities and your chance of losing money is probably even higher than if you buy individual stocks. Pick a strategy by a well known investment “guru” and start implementing it.

The next step is to put together a screen that will filter all of the stock market down to handful of stocks that meet certain criteria. You can develop your own screen. If you are new, I wouldn’t do that. I’d just use the parameters that your strategy recommends.

Once you have developed or picked a screen that helps you find stocks to buy that meet your criteria, start keeping a watch list. There are number of places you can do this. You can probably use your brokerage account or even a spreadsheet. Keep it simple but once a stock is on your radar, make sure that you watch the price and volume action of the stock on a daily basis.

What you are looking for are stocks that show strength. You’ll recognize strength by analyzing the price and volume action of a particular stock. I like to look for stocks that increase in price by at least 2% percent while at the same time also show a surge of volume of more than 100% above the stocks 50 day average volume.

When you find stocks that do this, what you are uncovering are stocks that probably have mutual fund managers buying those stocks for their portfolios. When a mutual fund manager starts buying a stock for its fund, it can’t hide it and the increase in demand for the stock pushes the price up.

Your goal is to try and time your buys when these stocks start showing the first signs of mutual fund support. Your odds of successfully finding a winning stock go up tremendously when that happens.

Learn more about buying stocks and stock market investing at Stock Market Investing Today.

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Looking For Winning Penny Stocks

The most crucial aspect of penny stock investing is doing your homework right. You do that, and you win; you neglect to do your research thoroughly, you lose money. As more investors get into penny stocks, it has become important to learn how to do proper research. Things are not helped by the fact that unlike large-cap and mid-cap companies that dominate the financial media, there is very little coverage on companies in this universe. However, if you look at certain sectors minutely, finding winners will become relatively easier.

Although you can find penny stocks in almost every sector, there are some industry groups where there is more likelihood of finding winners. Some of these include;

Biotechnology Penny Stocks- Biotechnology has gone on to become one of the hottest sectors and there are some sure winners that you can find there. Most biotechnology companies are small and in the development stage. Many are in the process of creating potential blockbuster drugs. The best part is that most of these companies’ stocks trade for pennies.

Renewable Energy Penny Stocks- The past few years have seen the price of crude oil appreciate considerably. At one stage, crude oil prices touched $140 a barrel mark. The volatile crude oil prices have led to calls for finding alternative sources of energy that are not only renewable but also environmental friendly.

This has led to the Renewable Energy becoming a very widely followed sector, with companies that have the potential to become huge in the future. Investors can find some real gems in the Renewable Energy sector that trade in the penny region. While it’s not suggested to focus on these two specific sectors exclusively, they may represent a starting point, where newer traders can get a better feel for the ebbs and flows of the markets.

When considering where to look for winning penny stocks, we should also address where NOT to look for them. Under no circumstances should you ever follow any picks that come from free websites, newsletters, or e-mails.

Most penny stocks presented by free services are simply paid shills, or pump and dump artists. They aren’t giving you good advice, and generally they simply want to make money off your back, whether that’s by selling shares as you buy, or by misleading you about the company’s outlook as they cash the checks that same company is sending them. It is becoming increasingly important to know where to look for investments, and also what information sources to avoid. Taking into account the discussion above, you will be off to a good start.

Peter Leeds is an expert on penny stocks. Visit his stock market website and benefit from low priced shares.

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