Before even thinking of buying penny stocks it’s probably a good idea to understand what they are and how they’re viewed by the investing world. Three basic categories of penny stocks are used to define the actual words. Each one has a separate meaning with entirely different investment potential, risk ratios, and trading strategies. You might already know one of these meanings, however if you are doing research or talking about trading with another trader, you need to be careful because the information could be referring to an entirely separate meaning. Therefore, you must understand each meaning in order to make sure everyone is talking about the same one.
True Share Value – When people who do not know much about investing hear “penny stock” this is what they assume is the meaning. This is when a penny stock is valued under a dollar. Usually people believe that the stock is only valued at one cent. This meaning is not used very often in publications, probably due to the fact that it makes perfect sense. If a trader is speaking of a stock that is traded on a major market, such as the NYSE, then it is typically worth no more than $5.00 for each share.
The Stock Market Exchange – On occasion, and in particular with penny stock brokers, the meaning of penny stocks is derived from the market on which the stock is traded. The most prevalent penny stock exchange is Over the Counter, or the pink sheets. Basically, this means that the stock is not qualified to be on one of the more conventional markets. Pink sheets have started to examine penny stocks to make sure they meet their requirements for their exclusive penny stock market.
Market Capitalization – This is the final category of a penny stock and it is based on the company’s value. Usually, the companies have to be worth under $100 million dollars. The essential aspect is the company’s size, rather than the actual value and the price of each penny stock share.
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Alternative Energy has been on the minds of people for decades and as the time goes on the technology improves. The price of oil is once again on the rise. The cost of coal has risen and after the latest disaster in Kentucky it has shown us that we need to move towards alternative energy.
Out of all the different alternative energy sources, wind power seems to be the best choice of them all. Why do I say that? Well, it’s because wind power can cost as litter as $0.02 per kwh. One company that I’ve spoken about before and I still stand behind is Mass MegaWatts Wind Power Inc. (MMGW,OB: OTC). They have been doing the right thing in progressing towards a more efficient way in producing wind energy.
Last Friday they released a report in regards to their new design in their turbine blades. Mass MegaWatts has multiple patents on their equipment and that alone will bring value to the company. With many other wind turbine designs, they are costly when it comes to repairs. Unlike other designs, Mass MegaWatts has put together a unit that doesn’t require huge cranes to make repairs to their blades. Mass MegaWatts have also designed a product that is not harmful to birds. The big GE wind turbines have killed many birds, including ones that are on the endangered list.
Presently the stock is sitting at around $0.70 per share and is ready for a break out. they have things in the works that will increase their revenue immensely. I’ve spoken to the company and from what we’ve talked about, this stock is ready to explode. In the coming weeks we will hear a lot of news from this company and I know that it will be positive and wall street will finally take notice of it’s potential. Currently there are no analyst covering this stock, which of course is good for investors looking to get in at good price before everyone else jumps on the “band wagon”.
Look for yourself and you will see that this is the next alternative energy company that will bring new and great things.
Happy Trading.
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If you spend any time researching the companies that you are thinking of trading stock in, I’m sure you’ve seen the advertisements, the pop-up windows and the e-mails informing you of different websites that will give you alerts on penny stocks that they believe that will make you some great gains.
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The only problem that I see with that is you really don’t know the person who is running the website. Quite a few of them are actually fund managers that use you to help pump up the price of the stock to help them make more money. Of course I’m not saying that all of them are like that but you need to be aware of you might be dealing with.
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I myself subscribe to many different alerts from websites just to see what is going on. In many cases I watch their picks to see if they are going to be right or wrong. Unfortunately many of the picks don’t really go anywhere after the initial jump. How I see it, many of these website/traders position themselves in a company, start hyping it up that it will do great for their readers/subscribers. As the price goes up they start scaling out their position. Most of the stocks that I’ve been watching over the last two months from these alerts would have lost me thousands of dollars. Don’t get me wrong, I would have made money on some of the picks, but not as much as I would have lost.
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The latest stock that I’ve seen being pushed is Biocentric Energy Holdings (OTC:BEHL.PK). I saw this being pushed by several different websites. I figured that this too would be another pump-and-dump fiasco as I’ve seen before. The stock price was $0.023 per share when I first received the alert, after three positive days where it went to $0.07 I was waiting for the price to fall. To my surprise, it still hasn’t started to lose momentum. As of this morning, the price per share was to to $0.14, a gain of over 500% in just a week or so.
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I’ve talked about it before and said that buying penny stocks can be very rewarding, but at the same time you can lose a ton of money. Be careful when you trade penny stocks, even more so than you would with bigger cap companies.
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