Penny Stock Investing and Trading

Ron Kaye
Editor
Stocks Reporter.com

If you ask anyone in the finance world what they think about investing or trading penny stocks, the answer that you will probably get will be: “Don’t do it.  You will lose your money since 90% of penny stock companies are scams.  penny stock companies just want to sell shares and are not interested in developing their businesses.” The truth is that investing or trading penny stocks is a very risky business.  So here is the most important tip about penny stocks: Invest only money that you can afford to lose.

If penny stocks are so risky then, why do people invest in or trade them?
The answer is because you can make a lot of money in a short time if you know what you are doing.

If you are still reading and have decided that you want to trade penny stocks, you need the right tools and good advice to help you survive and even win some money.

Step # 1 – Finding the Right Penny Stock to Buy

To discover the right one stock, you will have to do some investigation, or Due Diligence.  There are a lot of websites that will help you with your DD and you can find a list of useful ones at Stocks Reporter website.

The following points will guide you in learning important information about a company in which you are interested in investing:

1. Share structure: AS (Shares Authorized) OS (Outstanding Stock) and Float.
2. Transfer agent transparency
3. SEC filing
4. Financial track record
5. Competitive position in its industry
6. Business model
7. Earnings power
8. Valuation or the potential value of the company.

For example, when looking into share structure what you want to see is that there is no dilution.  A good sign is when the company has maximized the OS and is close to AS.  Watching Level 2 will also give you good indication if there is any dilution from the company. A good strategy is to follow insiders who know the company better than anyone else.

Step # 2 – Deciding When to Buy

After finding the penny stock that you plan to buy, you have to find your entry point and how to execute it the right way.  Following the trading in that particular stock for a few days together with chart analyzing will give you a lot of valuable information. At this point it is highly recommended for anyone to learn some basic chart reading or at least let others analyze the chart for you. You can ask for help on many of the popular message boards that discuss stock trading and chart analyzing.  An important tip about how to execute the trade in a penny stock is: Be very patient and always try to buy at the BID price. 

Step # 3 – When to Sell or The Exit Strategy

The exit strategy is something very personal to different traders or investors.
It is very important to implement your strategy immediately after executing the buy order.  In most cases, a good idea would be to set a sell order of 50% of your position at around 20%-30% PPS spike. Another 10%-20% rise of PPS and then sell another 50% of your current position and let the rest ride for a while. In general, your exit strategy should be very flexible and change with news, momentum, and volume.  90% of the time, though, you should sell at the ASK so it won’t affect the run.

TIP: Remember always to take profits.

Happy Trading

Ron Kaye

Stock Pick February 2008 **CPSL**

China Precision Steel Engages Moore Stephens as its New Accounting Firm
December 13, 2007 7:00 AM ET

SHANGHAI, China, Dec. 13 /Xinhua-PRNewswire/—China Precision Steel CPSL, a niche precision steel processing company principally engaged in producing and selling high precision cold-rolled steel products, today announced that it has engaged the public accounting firm Moore Stephens P.C. as the Company’s new independent registered public accounting firm.

“Moore Stephens has strong experience in working with Chinese companies listed in the United States,” commented Dr. Wo Hing Li, China Precision Steel’s Chairman and CEO. “We are pleased to engage Moore Stephens and look forward to working with them in the future.”

About China Precision Steel

China Precision Steel is a niche precision steel processing company principally engaged in the production and sale of high precision cold-rolled steel products and provides value added services such as heat treatment and cutting medium and high carbon hot-rolled steel strips. China Precision Steel produces high precision ultra-thin, high strength (7.5 mm to 0.05 mm) cold- rolled steel products primarily for automotive components, food packaging materials, saw blades and textile needle manufacturing companies in the People’s Republic of China. However, China Precision Steel is expanding into overseas markets such as Nigeria, Thailand, Indonesia and the Philippines, and intends to expand into Japan, the European Union and the United States in the future.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of the Company’s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which the Company is engaged; cyclicality of steel consumption including overcapacity and decline in steel prices, limited availability of raw material and energy may constrain operating levels and reduce profit margins, environmental compliance and remediation could result in increased cost of capital as well as other relevant risks not included herein. The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information contained in this press release.
For more information, please contact:
CCG Elite
Crocker Coulson, President/Leslie Richardson, Financial Writer
Tel:  +1-310-231-8600
Email: crocker.coulson@ccgir.com / leslie.richardson@ccgir.com
China Precision Steel
Leada Li, CFO
Email: leadali@biznetvigator.com

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Stocks Reporter has received no compensation in the form of cash or securities for coverage and has no position of CPSL shares.