To be honest day trading probably isn't the best idea if you're just starting out. It's extremely easy to lose all of your money very quickly if you're new to the game.
It is good to have a mixture of companies that have great growth potential along with some from significant companies in your portfolio.
I think a good place to begin would be with a stock screener. Morningstar has one that is free. Companies with much higher than average revenue growth are always worth a look. Higher than average EPS and margin growth and ROE are also attractive characteristics. Relatively low PE, PB, PS, and PEG are also good things in general. And institutional interest and healthy daily volume are generally important. Forget about the sticker price and look at the fundamentals. Some good companies you find will appear "expensive" by the sticker price, but are often very cheap based upon the amounts of money they bring in. And you'll also find a few gems here and there that are under $10 or even under $1 on occasion. But sticker price should not really be an issue above $10. And be MORE cautious of stocks under $10 and especially under $1.
I'm not much of a risk taker. I like to stay on the safe side of things. The stress and fear drive me crazy and it's too much for me to take!
I feel that penny stocks are a lot like slot machines in a casino... They are there as an option for the little fish that just wants to get a horse in the game. I do not feel that it is wrong to test the waters with a small investment, but you really should do your homework on the fundamentals of any asset before you invest. Sometimes the price of the penny stock speaks for the value of having it in your portfolio.
If you're inexperienced in stock investing, I'd reconsider your strategy of looking at penny stocks to start getting into the markets. A stock priced at one penny does not HAVE to go up by any means. [/QUOTE] Glad you said this. I was looking into penny stalks and thought I'd use them to experiment and start getting into the markets. I'll reconsider this and research more. Thanks for the heads up!
Where else can it go, down? Think of how much farther that stock can go down versus how high it can go. The amount of risk is pretty much equal to the amount you invest in it. That being said, penny stocks are about the only one's out there that if you lose a lot on them, you only have yourself to blame.
That is true. It's on you if you lose on those bets. Thats what they are, "bets". Unless you have inside info, you are straight gambling. You might hit it big with one of those, but your "odds" are a "long shot" to "win". It's purely gambling.
They are generally worthless at that point, and if you buy a hundred stocks all priced literally at one penny, you will probably not be thrilled with the results. I manage risk by either: 1) (most commonly by far) doing lots of research on a company; or 2) occasionally by limiting my position size in a company that is rapidly moving due to catalysts and that I will likely just "trade". If there is no legit info available - and no fundamentals, no catalysts, no institutional interest or respectable daily trading volume - I don't buy it... not even for a penny.
That's half the fun of investing The unknown. When you make an investment you have to outcomes, sink or float. When you float, that's the greatest feeling
