If you have decided that you want to dabble into stocks investment, particularly penny stocks, you will need to hire a broker. Penny stocks brokers are usually one-stop shops for the buyers and sellers of penny stocks. They maintain an updated database of the different penny stocks being traded on the OTCBBs and the Pink Sheets, enabling you to make a choice from a varied array of possibilities. There are many brokers out there, each one competing for your account, so you will have to be careful when you choose.
If you are serious about stocks investments, then you're going to be in this for some time, and will be working closely with your penny stocks broker. Besides having a broker whom you can trust and rely on, you want somebody you will be comfortable working with.
Full Service vs Discount Broker
There are two kinds of brokers. A full service penny stocks broker will give you financial advice as well as manage your penny stocks portfolio for you, for a fee. A discount broker will charge you only minimal rates because these services will not be part of the package. If you don't understand very much about stock investments and trading, a full service broker can advise you. If you prefer to do the researching and selection yourself and only need somebody to place the order for you, then a discount broker will serve your purpose. Whichever one you choose, make sure he is a licensed and registered one.
Choose one broker the one you feel you can work best with instead of two or more. It is easier to track and manage your portfolio when only one person is handling it.
Criteria for selection
Commissions. When choosing brokers, check out the broker's fees and commissions. Find out if there are any hidden charges that will mean extra expense for you. Is his asking commission bigger than that of the other brokers? Although the commission rate should not be your sole criteria for selection, you want to go with a broker that charges reasonable brokerage fees and commissions.
Speed in executing your order. Is your broker quick to act upon your orders? Many times, speed is of the essence especially when the penny stocks are fluctuating fast. You want a broker whom you have easy access to and who can quickly execute your order before the prices change.
Reliability. How reliable is the broker's service? A good broker will take steps to make sure his internet and computer setup is prepared against internet disconnections and website breakdowns, especially when the penny stocks are time sensitive. Also, how long has the broker been in business?
Policies. Find out about the broker's charges, such as if there is any minimum required balance, commission rates, monthly fees, and what his trade shares policies are. Trade shares policies differ among brokers one broker may have a policy that does not allow the trading of shares under $1, or requires a minimum deposit of $2,000. Another broker may not have any such limitations.
Accessibility. You want a broker whom you have access to, whatever happens. Phone accessibility is very important, especially when websites or internet connections are down. The last thing you want is to sit around all day waiting for your broker to get back to you, especially if a trade goes wrong.
Now I know where support is and resistance is, if any or all of the MA lines are BELOW my price, they act as support IF any or all are on TOP of the price they act as upcoming resistance.
Next I look at the previous runs highs...those highs will act as ADDITIONAL resistance added on to the MA lines if any that are on top of the current price and I usually find at least 2 or 3 prices that are currently higher then the current price of the stock, EVEN IF THAT MEANS GOING BACK 2 years!!! Some people really hold on to a stock and you have to know if they go back that far, they want to SELL at a even price and say PHEWWW lucky me!! So that will act as resistance!
Now you have to look at the other side of the coin. If the stock does fall, where is SUPPORT. Look for the nearest MA line below the price, because that is "typically" where the stock will fall to. Soooo "what if I buy in now" Where can the stock go before resistance and where could it fall for support? I ask myself that each time. Now, you want to buy the stock as close to support as possible **OR** right AFTER break out / resistance for a quick ride
Then, take a look at the chart again, is the stock in a uptrend or downtrend. If its a uptrend good, how long has it been riding? Is it a play like TNOG where it is a slow and steady consistent rider OR is it look like a POP / PUMP stock, (meaning no real previous pattern and all of a sudden 120% up one day) I prefer to get in stocks that look like they have something to their runs not just a SPIKE volume pop one day wonder (those are good to play but you have to know how to get in and out safely)
So if it is a bottom or downtrend play, where is bottom?? Where is the year low? 2 year low? Double bottom price, triple or quad bottom price? Look for all of these. Double bottom plays (triple and quad too) are nice entry spots and it is basically looking at the chart and seeing that oh yea, the stock recently hit a LOW of .0019 then ran to .0027 fell and is now hitting .0019 again (indicators are also low) ok hope on..this is a double bottom play.
I look for stocks that are low RSI either 30 or looking to bounce off 50, williams %r is going near -80 or even red at -90 (even better sometimes) a MACD line that is looking to cross over the EMA or the 0 line (all explained in that section) Full stochs are low and rounding near the 20 line or just below and then icing on the cake...cci bottomed or slowly turning up AND STILL below the 0 line and DMI+ looking to cross DMI - line.
Then I make my "educated" decision, knowing AHEAD of time where support and resistance lay!
Is it easy? Heck no, is it 100% accurate, NOPE but it helps. Lastly, make sure the stock has some OK volume, if the stock is trading at .008 and only averages 200k volume, that means only like 1 buyer and remember you cant buy and or sell unless you have a opposite action to buy or sell into.
This article was written by Stockanalyzer of stockhideout.com Stock Message Board
Both Nir Dotan & Robs are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.