Even if you feel your longer time horizons make getting quick executions where you want them not
important, getting in and out at the exact right time will help you realize those paper profits. Be sure to
check with the broker you plan to use to see what is required to access their most advanced trading
platform. Doing whatever it takes to get this kind of platform for free will save you tons of money as
compared to buying expensive software, and paying hefty monthly fees for each and every feature. The only
thing you may want to pay for is screening functionality. There is simply no free service that can screen for
the real liquidity you are looking for in Penny Stocks. Some services allow you to screen and sort stocks by
price, Trades Per Day and Dollar Volume, and these are the types of features you want to look for.
Currently, we believe the best screening service for Penny Stocks is from EquityFeed.com.
A stocks fifty-two week high and low can allow you to gain insight into the future stability of the particular
equity. Stocks with tighter bands tend to be more stable, while stocks with wide ranging prices over the last
year may be less stable, more dangerous and volatile. Stocks with wide ranging 52 week bands that are
closer to the lower band can often signal a spiral that ends with all investors loosing everything. These are
the kinds of stocks that should be very lightly weighted in your portfolio, and are stocks in which you should
probably have shorter time horizons. Stocks with a tighter range, that are in the upper half of the band tend
to be more stable, are seen as higher quality, and can stand more weight and time in ones high risk
The first place you look to try and determine the seriousness of the company is at it's Company
Officers. The shear amount of management is important, but what is more important is the history of each
figure. Try doing a search in the SEC database for each member of management, and you may be
surprised at what you find. Often, we find someone who has ran many a business strait into the ground
time and time again. These are obviously the ones to avoid. If you really want to do some digging, try
running a simple Google search on these individuals.
Insider and institutional activity can be important to take a look at as well. If insiders own more than 50% of
the company, they can and will make all of the decisions, and other shareholders votes will be useless.
This does not necessarily mean that we will be sticking around long enough to vote on important issues,
but it is important to be aware as we often see management make poor decisions, and a kind of
shareholder revolt that can really move a stock. Sometimes stocks are almost completely controlled by
management, and when a company like this is doing great, we do not mind tagging along for the ride.
Institutional and mutual fund ownership is rare in the world of Penny Stocks, but when we do see
substantial big money interest, it can often be a great sign. Sometimes, however, companies strike a deal
with smaller firms to hold a tiny amount of shares, just so they can show institutional ownership.
Thankfully, transparency has evolved to the point that we can see exactly how many shares this firm is
holding, and it is important to multiply this number by the current price to gain a real perspective as to
exactly what kind of an interest they may have.
The companies transfer agent can sometimes be helpful in smaller companies with large amounts of
shares outstanding. You can call the transfer company and obtain a physical copy of your ownership
record, or stock certificate. This will keep your shares from being lent to short sellers by your broker.
Contact the company directly or their investor relations firm if you do not understand something they do, see
a discrepancy in their financial statements, or need to know how many shares they have outstanding. Do
not call the company for a pep talk, or to complain, as you are taking time away, and potentially taking
profits away, although that may be a little extreme. The most important thing not to do is to call as a final
decision maker, as talented CEO's can steer you in their direction every time, and you can leave the
conversation feeling euphoric and ready to buy no matter what, which can sometimes lead to a long and
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