Identifying Hot Penny Stocks

When financial news networks cover the stock market, they tend to focus on stocks traded on major stock exchanges, such as the New York Stock Exchange, NASDQ, London Stock Exchange, and the Japanese Nikkei. For many investors, these traditional stocks, the high brokerage fees, and the long wait time to see a profit are not attractive. These investors, the ones who seek higher risks with the possibility of higher immediate rewards, are trading penny stocks. Since the penny stock market is generally not covered by the mainstream financial media, investors often decide which stocks to choose on their own.

One way to identify which hot penny stocks to pick is to follow national stock trends. Instead of investing in traditional blue-chip companies, look for second- or third-tier companies, startups, and companies that have some liquidity, capital, or debt challenges. These companies should feel the trickle-down effect of a bull market in their particular industry. So instead of investing in Starbucks, you might find a regional coffee shop that offers hot stock and the opportunity to get in on the ground floor.

There are a number of websites dedicated to identifying hot pennies. These sites offer their best picks on a daily, weekly, and monthly basis. These sites may also offer you the opportunity to speak with successful stock investors via instant chat, email, or discussion forums. Instead of turning to a traditional broker for advice and advice, you can chat, in real time, with other investors about which popular stocks to pick. You can record their successes and progress to see if they are as successful as they claim to be.

These stocks aren’t subject to the same rigorous filing, listing, and regulatory standards as traditional stocks, so finding unbiased research into a company’s assets, liabilities, profits, and debt can be challenging. Most analysts recommend that you do some of your own research on your penny stock options. At the very least, you’ll want to look at a company’s business models and recent profit and loss statements to get a picture of the company’s overall financial health. Sites like Google Finance and Yahoo Finance are good places to start your search for unbiased research on their popular stock picks.

Deciding which popular penny stocks to choose is part of research, intuition, and networking. By engaging in the conversation with other penny stock investors, you’ve developed a significant advisory network and can see how successful your penny stock picks are. These chat rooms, message boards, and discussion forums illustrate whether these investors are putting their money where their mouth is. As with any stock portfolio, timing is of the essence, so keep an eye on the movement of your stocks. Since penny stock investors tend to trade in higher volumes than traditional investors, even moderate gains and losses can add up quickly. Choosing hot penny stocks is an option for a non-traditional investor looking for a fast-paced, high-risk, high-reward scenario.