Trading penny stocks is like betting on a horse race. Where do you go when you want to have a good chance of winning a lot of money at the track? You don't go to the main track do you? You go to the one down in the slums where the lesser known horses race. You go where the odds of finding that sleeper are the best. You go where no one knows the contenders and the lines are way off.
Trading them is the same way. If you want to hit the bigtime gains, you need to speculate. Trading penny stocks allows you to do this. Why? Because all of the big name brokers that manage huge hedge funds can't play around in penny stocks. They manage billions of dollars and would buy up every share in one trade.
They have to stick around where the big boys are and rely on pure trading skill to make gains. If you get into trading them, you have the edge of being at the track in the slums. You can dig deep and find that undervalued Clydesdale of a stock that no one knows about. Then you bet big, and you take the house for all it's worth.
This isn't done without the proper research though. Make sure when you are trading penny stocks to keep up with your pick. Before you make the trade, pull up their financial data. Compare their growth to the industry average. Compare their earnings value to the earnings value of the industry. See what's going on in the news with this company.
You can make a lot of money by trading penny stocks in the S&P, just make sure you are doing the proper research before you go buying something that a friend told you was hot.
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Source: www.isnare.com
