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Author Topic: How to separate the truth from the hype?
SouthernCross
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Ok...I want to lead off with a disclaimer: I know very little about trading stocks. I understand the main principles, but my biggest source of frustration is trying to separate the facts from fiction.

I don't have thousands to invest, so I'm looking at trading penny stocks. I don't have the ability to day trade, so it's really just a matter of picking some stocks, buying them, and selling them off for a profit. But where do you start? It seems you have 2 choices: 1) follow news and earnings reports or 2) follow the advice of fellow investors. Obviously, both are extremely risky. Earnings reports and news can be bogus; and relying on strangers for advice on how to spend your money....well, you get the point.

Generally, folks I've talked to say "stay away from penny stocks". They laugh and say that there are too many scams out there and people get suckered out of their money. I can see how this happens. By the time you discover that a stock is moving, it's too late. You're either on the inside or you're on the outside, watching from the stands.

Here are my questions:

1. What are some good sources to locate worthy penny stocks. I don't want to throw a dart at a board.

2. What are some good ways to research the stocks once you've picked them?

3. What "red flags" and pitfalls should I watch out for?


I'm not looking to get rich quick; just looking for a little extra income. Thanks.


Posts: 1 | From: Houston, Texas USA | Registered: Oct 2004  |  IP: Logged | Report this post to a Moderator
Machiavelli
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First of all you do not sound like you know much about trading... my first suggestion is you buy some books and read read read.. self educate yourself about stock trading.. dont rely on others..

second since you cant day trade due to financial limitations I would say Swing Trade (buying and selling stocks from 2 to 7 days and even up to 3 months.. ) instead ..

Third... Do not trade in stocks that are under $1 a share.. thats where most so call scams are... or as i call them... Pump and Dumpers.. try trading stocks in the $1 to $5 range... less hype and scammers..

Fourth do your own research... dont trade on "stock tips" ... if someone gives you a "tip" .. research the stock yourself before buying it... i prefer Technical Analysis over Fundamental Analysis.. but you would have to determine which style fits you best.. or if you want to combine both styles...

Anyways if you are still looking for a brokerage to open a account.. the one i use is Choicetrade.com... you can open a small account and there customer service is excellent.. commissions are $5 per trade (buy & sell) for mainstream stocks as well as penny stocks etc..

If you want a suggestion for a book to learn Swingtrading or trading in general... I highly recommend A Beginner's Guide to Short-Term Trading by Toni Turner (www.toniturner.com) ... you can get it on her site, Allstocks book section, amazon.com etc... I also highly recommend The Candlestick Course by Steve Nison (www.candlecharts.com) which can also be purchased on different sites... hope all this helps..

[This message has been edited by Machiavelli (edited November 17, 2004).]


Posts: 4669 | Registered: Mar 2004  |  IP: Logged | Report this post to a Moderator
poorman
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I agree with all that Mach said but heres another opion.

If your watching the boards you will see posters that everyone respects. Pay atention to some of their picks for a while and see which one matches your trading style. Some swing trade, some look at long term as 20 min.
When you figure out whitch way you would like to trade try researching some of their picks and see if you can figure out if they are good or not then paper trade them for a while to see if you are right. Most people want to jump right in and start making money ( don't we all) but without learing how you are going to do this you may as well throw your money away. This is your investment, learn how to manage it.

Good Luck Trading


Posts: 1169 | From: Pollock Pines Ca | Registered: Feb 2004  |  IP: Logged | Report this post to a Moderator
   

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