When trading any security you really need to do your homework. If you do not, and the price per share drops, you have no one to blame but yourself. Stock picking sites and bulletin boards often allow a trader the benefit of finding many emerging companies. These are great places to start but you must always do your own "due diligence".
In the interest of full disclosure, There are many different types and styles of pick sites. Most are not very good, a little shady, or sometimes even completely illegal. Just recently I saw a site pick a stock on one day, but post that it picked the stock 2 days earlier. These types of practices are "shady" to say the least. The SEC investigates these companies as "pump and dump" scams and has many convictions.
Stock picking sites you should avoid using are ones that use false advertising and misleading statements. These sites will often state unrealistic gains, "this stock will go up 10,000 percent" or "this is the greatest company ever". As I said earlier, some sites will even tout a false history. Saying that their picks go up a certain% when they never picked these stocks or changed the dates on their picks. In reality no one knows how a stock will do, through solid charting and research you can put the odds in your favor.
Also watch out for these trigger words "guaranteed", for a "limited time" we have "insider information". If you feel pressured to invest, it's probably not a good thing. Sometimes you will want to get in at the bottom, or the support level of a stock, especially of a penny stock. If you feel pressured to buy though you should probably think twice. If you think you're a victim of internet stock fraud or a pump and dump scheme report them to the SEC at enforcement@sec.gov.
This type of "pump" follows into bulletin boards and chat rooms everywhere. Sometimes these are just novice traders attempting to make their stocks rise, at other times they are paid representatives of the company making misleading statements in order to keep the price per share higher while the company dilutes.
Trading in penny stocks and micro cap stocks can be very treacherous, but can also be very rewarding. You must look at what type of trader you are when trading these stocks. Are you a day trader, do you "flip" stocks that are running, or are you an investor. Often "day traders" will buy a stock that had news or had been "picked" by a site right at the opening bell then attempt to sell the same stock a few minutes later. An investor on the other hand will buy a stock to hold for long periods of time in hopes that the security becomes the next greatest thing on Wall Street. Know what type of trader you are, plan your trades ahead of time and do your "due diligence".
Article written by Keith Guyette.
Stock Picks are a great way to find new stock ideas, small cap stocks, growth stocks and stock sectors that are hot right now. Some stock ideas are penny stocks, some are hot stock trades that could have a large amount of potential. Investors should always remember that they should never invest in a stock pick unless they can afford to lose their entire investment.
Stock picks aren't without their fair share of risk and investors should consider their own risk tolerance level and always consult their financial advisor. When searching for new stock ideas it's important to screen stocks and make a list of stocks to watch. Some of the best small cap stocks and penny stocks are found by completing your own due diligence and learning as much as you can on stocks through books and other media outlets.
Do not discount stock market experience; in the stock market experience is very important. Experience comes with stock trading and researching stock information.
Stock information from specific companies is important to pay attention to when you find a stock pick and want to follow the small cap stock. Also, stock newsletters usually release new stock picks and stock ideas. Investing in the stock market requires attention to detail and following stock sectors that are hot and not. It is important to remember the saying that a rising tide can lift all ships and this goes the same for sectors and industries in the stock market. Growth stocks in an industry or sector that is hot become hot stocks as a group and many of them begin to move within that industry. Investors can usually find stock updates on stocks in hot sectors as many publishers start following these stocks.
One type of stock idea, penny stock picks require investment research and there is not as much stock information on them. Remember, to always complete your own daily stock analysis on penny stock picks. NASDAQ and AMEX stocks are also popular in the stock market.
Remember to look at a company's financials including a stock's balance sheet, income statement and cash flow statement. Usually a stock pick profile will cover one if not all of these financial statements. There are also key ratios that investors can use as tools to consider a stocks value when completing stock market investment research. A key ratio that is commonly calculated by stock market investors is the P/E ratio, known as just the PE ratio or Price to Earnings ratio or even known as the ?earnings multiple? or just the ?multiple?. A P/E ratio of a stock is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share. A higher P/E ratio means that investors are paying more for each unit of income. The P/E ratio is calculated by dividing the stock price of a share by the annual earnings per share. Annual earnings per share is known as EPS. Generally, stocks with higher earnings growth will have a higher P/E and those with lower earnings growth will have a lower P/E. Some investors like to receive intraday stock alerts on growth stocks for day trading. Day trading is also known as swing trading. There are a lot of stock ideas that are offered as free stock picks out there that give new stock information to those not finding as many new stocks as they'd like.
Both Stapin & Russ Urban 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.