Penny Stock Research - How To Do It Right

We cannot overemphasize the significant importance of careful, critical and cautious penny stock research for many reasons. Microcap shares are so thinly traded that it is easy to buy these assets but so difficult to sell them when their values are down, thus, transforming these securities into liabilities. Furthermore, even the smallest price movement downwards in nano stocks can mean disproportionately large losses that so often lead to total capital wipeout.

But we understand if many traders and investors may balk at the prospect of researching penny stocks. The unreliability of financial statements, the absence of regulatory measures and the prevalence of fraud related to penny stocks all combine to make research on these non-marketable securities harder in comparison with listed stocks on the Big Boards. Patience is, truly, a virtue in penny stock research but not everybody may have the tendency or the time to be patient either.

Fortunately, there is an effective way to research microcap shares without sweating it out too much. Take note that the emphasis is on "too much" for you must still do your fair share of the work in identifying the nano stocks with the highest profit potential.

We are talking about a reputable professional research and stock alert organization. Basically, subscribers are provided with many types of services related to the identification of the penny stocks that are undervalued, at a low buying point and yet have the signs of increasing in value in the near future. In many ways, you have just found an ally in your moneymaking endeavors.

The best penny stock research firms provide the essential tools in making successful trades. These tools can include daily stop loss levels, trailing stock levels and take profit levels, among others, and then alert their subscribers through newsletters as well as e-mail and text message alerts. These services can either be available for free or for a subscription fee with most of the reliable research firms going by the latter method. After all, gathering research resources and then interpreting the information takes time, effort and money.

Of course, the subscription fee is well worth it when the tips, tools and techniques suggested by the research firm prove useful in making profits. You also have the benefit of reapplying the tools and techniques provided by the penny stock research firm in your other investments, thus, leading to excellent value for your money.

The assumption is that you have chosen the right research firm. Keep in mind that just because an online site labels itself as the best does not necessarily mean that it is, indeed, the best. In the world of penny stocks, trumpeting your own horn is the name of the game.

Still, we suggest looking into these firms since these have the most reliable reputation in the industry when it comes to research.

Bloomberg is a world-renowned financial information provider providing up-to-the-minutes news on events that have impact on the stock market
Yahoo!Finance is a free online site that provides comprehensive financial news and public company offerings and filings
Stock screeners are also great for research for as long as you have the criteria for your most desired stocks

No matter which of these penny stock research options you turn to, the most important thing is to always trust your own informed instinct.