Top 10 Penny Stocks - How To Build Your List

We should first emphasize that this article is not about the top 10 penny stocks in the market today. Keep in mind that microcap shares are highly volatile mainly because of the issuing companies' difficulty in putting up a good capital amount, a good business plan or even a good reputation in the industry, thus, preventing them from putting up an IPO. Not all microcap shares are bad investments per se but you should be extremely cautious when trading in these non-marketable securities.

Basically, we are saying that whatever top 10 penny shares may be good investments today will not be so tomorrow. We should keep from giving too much stock to any top 10 penny stocks list.

Instead, this article is about the top ten penny stock trading secrets - tips, if you will - that any beginner and seasoned trader can apply in their dealings.

• Prepare for your trading day. Before logging online to your account, spend at least half an hour reviewing your fundamental and technical analyses of the penny stocks set for trading. You may find something important that previously escaped your observation.
  • Pick your trading times. Follow the market's most profitable times, which successful traders have discovered to be mornings and late afternoons. Avoid the last hour, however, as the market can swing wildly in either direction.
  • Follow a trading plan. Your plan should include the point of entry and exit for a particular set of penny shares in your name to maximize profits while minimizing possible losses. Also, set the number of trades in a day to lessen your stress levels and, thus, make for better decisions.
  • Use your network of contacts. You may just be provided with the top 10 penny stocks to invest in at the moment. Again, be careful about putting too much stock in these hot tips since your careful research is still your best gauge for a trade.
  • Trust your indicators. Trading with your emotions is the surest way to lose capital but trading with pre-set objective indicators will lessen your risks for loss.
  • Check your personal mood. You may have an entry and exit plan in place but if your mood is marked by stress, anxiety or greed, we suggest stepping back for a moment. You are more likely to make bad decisions in such a mood.
  • Read the online newswires. You may stumble upon a possible addition to the day's top 10 penny stocks to trade in.
  • Take your time in studying the hot market trends. Yes, the online news and your network of contacts may be pointing to a hot commodity but keep in mind that it is your money at stake. So, study first, trade later.
  • Commit to learning. Even if you have been in the business and consider yourself an expert in penny share trading, there are plenty more of things that you do not know. Take note that complacency comes after greed in losing money in the stock market.
  • Know the limits of penny stocks. Yes, microcap shares can provide for good profits but there is always the axe hanging over the trader's head of losing the entire capital amount in one dip of the market. Set your expectations lest you expect too much money from penny stocks.

In the end, these top 10 penny stocks trading secrets are only effective if and when you can adopt these tips to your trading.