Join our investing community

Getting into Penny Stocks?

Discussion in 'Shares' started by LongeCrK, 13th Dec, 2014.

  1. LongeCrK

    LongeCrK Member

    Joined:
    13th Dec, 2014
    Posts:
    6
    Location:
    Melbourne
    So I've read this article on Verge and now all I can think of is investing into penny stocks. What do you guys think, is it possible for a total newbie to actually make a little extra on the side trading penny stocks? Anyone with experience?
     
    twisted strategies likes this.
  2. LongeCrK

    LongeCrK Member

    Joined:
    13th Dec, 2014
    Posts:
    6
    Location:
    Melbourne
    Anyone? I can't possibly be the only one
     
    twisted strategies likes this.
  3. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,424
    Location:
    NSW
    Especially newbies should not invest in penny stocks. This is an easy and fast way to lose money.
    Penny stocks are very unreliable and can go both ways (up and down) very quickly.
    Also without a robust risk/money management system/rules in place, your chances to survive in the market are almost nonexistent.
     
    twisted strategies likes this.
  4. LongeCrK

    LongeCrK Member

    Joined:
    13th Dec, 2014
    Posts:
    6
    Location:
    Melbourne
    You have confirmed my doubts. As interesting as it sounds, I won't be diving into this sort of this anytime soon. Do you perhaps know a great site/book where I can start learning about penny stocks? It seems like most of the sites are scams with promises of making you millions in just a few days :mad:
     
    twisted strategies likes this.
  5. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,424
    Location:
    NSW
    Well...if you are a newbie (as you said), you should get good general knowledge about stock market (forget penny stocks for a while).
    Read books...
    On this forum there is a lot of information on this subject (check shares/trading thread).
    Consider attending some seminars but run ONLY by professional traders with proven track record !!!
    Do not waste your time and money talking/asking financial advisers/planners/stockbrokers/TV "gurus" etc what you should do!!
    Simply - educate yourself. Try to make some money yourself as NOBODY will do it for you !!! :cool:
    Check this site...How to buy shares in Australia |Share Trading | The Trading Game
     
    twisted strategies likes this.
  6. Christianrenel

    Christianrenel Active Member

    Joined:
    13th Jan, 2015
    Posts:
    31
    Location:
    Sydney
    Penny Stocks

    Penny stock, is an interesting area of the market, and is a place where an individual can lose the shirt in process.

    When looking at penny stocks first have daily volume turnover, this may give a starting point on where others are putting there money into the market.


    Kind Regards

    Christianrenel
     
    Last edited by a moderator: 27th Sep, 2016
    twisted strategies likes this.
  7. Investment_writer

    Investment_writer New Member

    Joined:
    20th Jun, 2011
    Posts:
    4
    Location:
    Brisbane, Qld
    Does Warren Buffett invest in penny stocks... hmmm?

    The general idea with investing is to: a) preserve capital and b) get a fair return on your money, and if smart, c) get leverage into a solid investment.

    This seems to negate investing in speculative stocks. If you like the idea of getting in early on a winner, why not look out for companies like SEEK (not SEEK but like it) in the early days when they seem to be taking over their marketplace. Or if small amounts, try ETFs for diversification.
     
    Last edited by a moderator: 27th Sep, 2016
    twisted strategies likes this.
  8. Kodah

    Kodah New Member

    Joined:
    16th Feb, 2017
    Posts:
    2
    Location:
    Victoria
    well i just put all my net into algae tec, its a penny stock but i know it will go back to at least 30 cents in the next two months... you risk a lot to lose in penny stocks, but you win a lot more, it kind of weighs in fair... Happy trading !
     
    twisted strategies likes this.
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,774
    Location:
    Sydney, Australia
    You can't "know" it will go back up unless you have insider knowledge not available to the general public, which I believe would constitute insider trading? Otherwise you're just "praying" it will go up.

    Why on earth would you put "all your net" in one stock - and a speculative one at that? That's not investing - that's not even speculating - that's gambling.

    No, it doesn't "weigh in fair". There's usually a reason those stocks are cheap. Buying them is speculating - not investing. By definition there's every chance you will lose your money. Do that enough times and you won't have any money left to invest.

    If "all your net" amounts to something less than $10K, I'm not impressed - it's hardly much of a risk. Come back when you've got 6 or 7 figures invested in the market and then tell me about your risk management strategy.
     
    Mughal, Player and twisted strategies like this.
  10. Kodah

    Kodah New Member

    Joined:
    16th Feb, 2017
    Posts:
    2
    Location:
    Victoria
    all i can do is learn my man, i hope nothing but success for you my friend :)
     
    twisted strategies likes this.
  11. twisted strategies

    twisted strategies Well-Known Member

    Joined:
    3rd Nov, 2013
    Posts:
    431
    Location:
    QLD
    i took my time on this , because a don't consider myself 'a trader's boot-lace '

    i do ( but rarely ) buy penny stocks BUT i always buy what i want to hold ( some of them) 'forever ' , say the stock rises 150% i will rescue the investment cash and costs and keep the remainder long term ( i TRY to sell 40% to keep 60% without cash exposure )

    obviously company directions change so an exit might be wise ( but that is an after-thought )

    buying with the intention of making a quick ( say 50% ) profit isn't a game i play .... ALTHOUGH sometime a take-over can make this easy for the patient , say stock 876 is a take-over target ( close to the formalising of the take-over the impatient might dump that share , )
    recently bought into TTS to deliberately accept the offer ( as a cheaper way of topping up TAH )

    while neither TTS nor TAH are 'penny stocks ' the concept is valid and can work

    good luck , but take care
     
  12. MrMarket

    MrMarket Member

    Joined:
    26th Feb, 2017
    Posts:
    9
    Location:
    Sydney, NSW
    In my view, if I wanted to dabble in this spectrum of the market, I would probably be better placed investing in a highly rated micro cap fund... It's difficult to do part time research on top of a day job, let alone competing against offices full of CFAs and PMs with collective small/micro caps investing experience...
     
    austing and twisted strategies like this.
  13. MrMarket

    MrMarket Member

    Joined:
    26th Feb, 2017
    Posts:
    9
    Location:
    Sydney, NSW
    I would also echo Simon's points by adding the fact that when you pay for something that is trading above the intrinsic value (or what something is really worth) and it tanks, the chance of permanent impairment of capital is very real.

    The tried and tested way to invest is to pay 50c for something that is really worth $1 - that is you buy below the intrinsic value. If it drops in value in the short term and provided that the fundamentals are intact, you still have what is known as a margin of safety. Obviously working out intrinsic value is easier said than done, but investing in stocks in any other way in my view is gambling.

    On this basis, risk is defined as the potential for permanent capital loss. An asset class that is considered 'riskier' than others, can in fact be lower risk if fundamentals are intact and at the right price...