Penny Stock Fortunes - Is It Even Possible To Build One These Days?

Like most ways to build wealth sans winning the lottery or inheriting money from a relative, the so-called penny stock fortunes require work - plenty of hard, honest and dedicated work. Fortunately, it will not take a fortune to make a fortune where penny shares are concerned because these are highly affordable securities.

But you must still put in the sufficient amount of work into making the right decisions to build your penny stock fortune. Keep in mind that with the high-risk nature of microcap shares, these securities may not be your best option to build a major investment portfolio. In this article, we shall discuss a few of the tips to build a fortune from microcap stocks.

First, you have to practice your trading skills through the so-called paper trading or virtual trading feature offered by online brokerage firms. These are virtual accounts where you can deposit, withdraw and trade in penny stocks as if you are doing so with real money. You will then be able to practice making penny stock fortunes albeit on a mock basis.

Your practice in paper trading can be translated into the real world. By then, you have identified your strengths and weaknesses as well as formulated your trading system and strategies - all without bleeding money. You may even use paper trading to create hypothetical situations before actual investments are made.

Second, you may want to pay for a subscription to a stock newsletter that specializes in penny shares. Before you jump in have a look at the track history of the newsletter editor and answer questions like these:

• How long has this person been trading?
• What sort of return does this person have overall? During the bullish stock market years? What about the bearish years?
• What is this newsletters online reputation? The good and the bad about news travels fast.
• Does it offer a trial period? You don't want to be locked into a bad subscription.

Once you have found the answers to the above, you will have narrowed down your list to 2-3 newsletters. Pick the best one and start with that. 

Third, you must absolutely avoid fraudulent companies and their issuance of penny stocks for an obvious reason. The most common type of microcap stock fraud is the "pump and dump" scheme.

Basically, it involves the artificial inflation of the price of owned penny stocks through the use of deceptive marketing hype ostensibly to sell the stocks at a high price - the pump part. Take note that these microcap shares were purchased at dirt-cheap prices.

Once the scam operators sell their overvalued shares, the true value of the shares emerge. By then, the prices have fallen and the victims have all lost money. This is the dump part of the scam.

Indeed, building penny stock fortunes is not as simple as scammers make it appear. You have to exercise due diligence, put in the hard work and guard your money against scams before your fortune sees the light of day and you see hundreds of thousands of dollars in your trading accounts.