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15/08/2013

spread false positive information

The most common micro cap trading scams are organized by promoters who use the media to spread false positive information about certain stocks. When the stock price rises on account of buying pressure, individual investors are convinced that it's a good idea to invest in it. The promoters get rid of the stock before its price crashes. At the same time, it is possible to trade micro cap stocks and make good profits since these stocks can be bought in bulk and also they show large spikes in value. Blue chip ones are rarely increasing very much in value. The following tips will ensure that you don't lose money trading in penny stocks:

1. Do lots of research: Whenever you hear about hot penny stocks you should find out whether they have good management. The companies should also have very high stakes by promoters. If a company has a great deal of debt then it is a very risky buy. If there is very little information about the stock then it is bound to be very risky.

2. Buy extremely cheap stocks: The cheaper they are, the less will be the likelihood that their price will slide further. It is very important to have sufficient downside protection.

3. Buy a basket of stocks: If you get a collection of penny stock picks then you should consider buying a few of them in order to spread your risk.

You need to sign up for penny stock alerts so that you have timely and accurate information upon which you can start working. If you have reliable information about pre-promotion penny stocks then you will be able to trade them and make a great deal of money. You could also try your hand at lucrative OTC stock trading which involves unlisted stock. Information about these stocks are available on OTC bulletin boards.