Tuesday 9 August 2011

PENNIES ON THE MOVE!

The penny stock market has become one of the most intriguing investment types. In fact, with so much volatility and uncertainty in the markets and with growing financial crises overseas it’s easily argued that now is the perfect time to invest in vehicles that have less downside potential.

So, what causes the price of a stock to move? Why is a stock so volatile on some days? Let’s look at some two factors that affect stock price and how you can use this reasoning to make stocks to buy and sell decisions.

Breakout News – Top penny stocks can see some huge activity, if the market anticipates a potential merger or signs a letter of intent to acquire a business. Once a deal is announced, the hot stock of the day generally, sees a large price increase. A company’s expansion into new markets may also have an impact a stock’s price, making it a definite stock to watch!

The Economy as a Whole- The release of economic data such as GDP, unemployment numbers, retail sales figures, consumer confidence etc will also have an impact on a penny stock alerts. For example, if there is a release of weak data for sales in a particular month for a particular industry, all stocks in this industry will likely experience a decrease once the announcement is made.

Although large cap stocks are affected by these factors also, they seldom have the ability to double or triple within a short period of time, if at all. Hot penny stocks can make insane percentage increases in a matter of days or even within one trading session! It is far much easier for a penny stock trading at five cents to double to ten cents than it is for a stock trading at $10 to increase its share price to $20. Penny stock traders and investors understand the gains that can be had by researching penny stocks that would otherwise not be obtainable by trading only large cap stocks.

1 comment:

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