How to Use the Ichimoku Kinko Hyo Indicator in Forex Trading

By   |  

In this article I will go over an indicator that is very dear to my heart, the mighty Ichimoku Kinko Hyo.
The Ichimoku Kinko Hyo has been around since before World War II when Goichi Hosoda created it for use on the Asian stock markets. He tested it until 1968 before releasing it to the public. It was only in the 1990s when it became noticed in the West.
The name Ichimoku Kinko Hyo translates to "Equilibrium Chart At A Glance" which is a perfectly apt description of how the indicator works. It shows the trader, at a glance an extremely detailed picture of price sentiment, strength of trend and support and resistance. A holistic picture if you will, that allows the experienced practitioner to tell very quickly whether a potential trade is a high probability or low probability in terms of banking profits.
An Ichimoku chart is actually made up of five distinct indicator lines that form the overall picture. These are described below:
  • Tenkan Sen which is the highest high plus the lowest low all divided by two, over the previous nine periods.

  • Kijun Sen which is the highest high plus the lowest low all divided by two, over the previous twenty six periods.

  • Chinkou Span which is the current closing price shifted twenty six periods into the past.

  • Senkou Span A which is the Tenkan Sen plus the Kijun Sen all divided by two and shifted twenty six periods into the future.

  • Senkou Span B which is the highest high plus the lowest low for the last fifty two periods, all divided by two, shifted forward twenty six periods into the future.
Another important Ichimoku structure is The Kumo, or "Cloud". This is the area between the Senkou Span A and Senkou Span B and is a key part of the Ichimoku Kinko Hyo. It represents key support and resistance levels but compared with traditional support and resistance lines, the Kumo shows a multi-dimensional picture. The thickness of the Kumo is an indication of how strong the support or resistance is. The thicker the cloud, the stronger the support or resistance will be. Also, given how the Kumo is plotted into the future, it gives a prediction of support and resistance levels to come. This is incredibly powerful, since most indicators are all lagging and reacting to price.

For example, if price was to quickly break through a thick Kumo you would have an indication that the move was extremely strong. The area in the middle of the cloud is called the equilibrium area and price in this zone is unpredictable and the experienced Ichimoku trader will not place trades in these areas.
The Kumo also has it's own built-in sentiment which you can use in conjunction with the price sentiment. Notice in the chart above that the Kumo changes colour after it pinches together. When the Senkou Span A is above the Senkou Span B, the Kumo is said to be bullish. Conversely when the Senkou Span B is above the Senkou Span A, the Kumo is said to be bearish. Again, because the Kumo is plotted into the future it can give you advanced warning of a change in price sentiment. Try getting that from a couple of Moving Averages!

The Kumo can also have flat tops and bottoms and these are important structures. They exert an almost gravitational pull on price. You will notice that when price breaks out of the Kumo and there is a flat top or bottom that price will often snap back to the flat Kumo. With experience you will be aware of these and ensure you do not get into a fake breakout trade by ensuring that price has broken free of the gravitational pull of the Kumo.

With all that said, how does one go about trading based on the Ichimoku Kinko Hyo? Well a full discussion of this is beyond the scope of this article but there a few basic situations that constitute trading signals of varying strengths and these are discussed below.

Tenkan Sen Kijun Sen Cross
If the Tenkan Sen crosses the Kijun Sen then that is a potential signal. If the the Tenkan Crosses above the Kijun then it is a bullish signal and if it crosses below the Kijun Sen it is a bearish signal. Fortunately the Ichimoku gives us more information to help us refine these signals. If a bullish cross takes place above the Kumo, then this is a strong bullish signal. If the bullish cross takes place below the Kumo then it is a weak bullish signal. Finally if the bullish cross occurs inside the Kumo then it is seen a a neutral bullish signal. The opposite is true for bearish crosses. A strong bearish cross would be the Tenkan crossing below the Kijun underneath the Kumo and so on.
However we are still not fully refined in terms of the strength of the signal. We can also consider the Chinkou Span. This is often referred to as the "final arbiter" that can either confirm or deny a trade. The general rule is that if the Chinkou Span is above the price action when a bullish cross has takes place, it adds more weight to the signal strength. The reverse is true for bearish signals, the Chinkou Span being below the price action adds more weight to a successful outcome of a short trade.
So one very powerful trading strategy is to wait for a strong bullish or bearish Tenkan/Kijun cross with Chinkou Span confirmation. These require patience but are very reliable signals.

Kumo Breakout
This signal is where price breaks clear of the Kumo, either above or below. A long trade would be indicated when the price action breaks above the Kumo and a short trade would be indicated when price breaks below the Kumo. You can also use the Chinkou Span as in the Tenkan / Kijun cross described above. You should also use the Kumo's built-in sentiment to confirm a long or short trade. Finally by paying attention to the dangers of the flat top or flat bottom Kumos, one can further add to the strength of the signal or discard it as too risky.
Hopefully this has given you a good introduction into the Ichimoku Kinko Hyo. If you have any questions, please just drop me an email and I will be happy to help you. I have been trading this for over a year on the longer time frames and it works extremely well.
Click HERE to get my free weekly Forex trading newsletter that covers trading strategies, indicators and trading mentality. If you are struggling to be consistently profitable in your trading then I urge you to read more at http://profit-with-forex.com
Article Source: http://EzineArticles.com/?expert=Eadfrith_Scott

Article Source: http://EzineArticles.com/6464263

7 Tips On How To Choose A Good Forex Trading System

By   |  

You know, one of the most important things to think about, when starting to learn forex trading, is how to choose a good forex system.
Why is this so?

Well it's because we want to trade a system that's worth the time and effort. Each forex system is different in several important ways (as you'll find out), so you want to make sure that it is one that you want to trade, before investing time and money (and effort!) into learning the system.
We ultimately want to find and trade a forex system that's profitable enough for us (and this is different for everybody!), that has an acceptable drawdown (some have very decent drawdowns - this is vital for most of us), and that actually fits into our daily routine (that is, we can actaully trade and not be stressed!)
When any of these 3 factors are not there, we find ourselves not able to start or continue trading the system.
In the meantime, we could be making money trading forex if we did have a suitable system!
So what we must do, is choose a forex trading system based on some important principles to ensure we actually benefit from trading, rather than causing frustration and lost time.
By the time you finish this article, you'll know how to choose a forex system that you can trade, and that's sure worth putting in the time to learn!
When looking at a forex system, consider closely:

1. The profitability of the system, shown as either pips per month, or dollar amounts based on a certain float size.
Profits are most commonly quoted in pips per month. The reason why this method is popular, is because it is one way of comparing between systems, though people may be trading different face values.
What you have to be careful of when looking at the pip profits per month however, is that the face value that's traded with any given float will depend on the average risk per trade, which in turn depends on the average stop loss distance for that system, if a fixed risk model is used. And this determines the dollar profits that will result from any float.
Say you want to trade with a 2% fixed risk model. If the average risk per trade in the first system is say 30 pips, and is 60 pips in a second system, then the average face value would be twice the size in the first system for any given float. If both systems produce the same average pip profit per trade, say 100 pips, the first system will, in terms of dollar amounts, produce the higher profit.

2. The maximum historical drawdown of the system.
This may be expressed as pips, or as a percentage of the cash float used when testing the system performance. For example, if the maximum historical drawdown was $2000 based on a $10 000 cash float, then the drawdown is 20% (as a percentage of cash float).
The maximum historical drawdown of a system is the largest decrease in equity that has occurred in the past during backtesting or trading of the system. You can use the drawdown to compare between systems, but you can also use the drawdown to figure out the amount of funds you'd need to start trading the system.
In the example above, you'd need at least $12 000 in the beginning in case a drawdown occurs when you first start trading, not years down the track.

3. The "profit-loss" ratio of the system.
This is the average size of winning compared to losing trades. A high ratio here signifies a degree or robustness in the system, but this figure should always be looked at together with the "win-loss" ratio of the system, which is the percentage of winning trades compared to losing trades.

4. A high win-loss ratio for a forex trading system is a bonus in that the system may be easier psychologically to trade.
Ultimately though, it's the combination of both that counts. That is, if the "profit-loss" ratio multiplied by the "win-loss" ratio is greater than 1, then the system is profitable. Ideally you'd want this ratio to be 2 or 3 or more to ensure that the system is significantly profitable, not borderline.

5. The consistency of the system.
If you can find a highly profitable system that has a reasonable drawdown, and is very consistent, then this is ideal. There's a sweet spot for everybody. You may accept a slightly higher drawdown and slightly less consistenty, if the profitability was significantly higher, while others may prefer a different combination of the above. Look at the monthly, quarterly and yearly results to best tell this.

6. The amount of time it takes to trade the system per day.
Some systems take only 15 minutes four times day, while others need a few hours. Some forex trading systems on the other hand trade only at certain known times, such as when major economic announcements occur. So you know in advance when you actually need to be at the computer. This ultimately depends on how much time you have.

7. Is the forex trading system systematic, discretionary, or part-discretionary?
Now this is where you may have a preference depending on your past experience as a trader. Some traders prefer mostly or 100% mechanical systems where there's not much room for discretion. The advantage of mechanical systems is that the analysis may be simpler, and there's less need to learn discretionary skills that come from real-time paper and live trading. However many systems that are very profitable can't be made into completely mechanical systems. Finding the type that suits you is important here. Some people who are used to trading 100% mechanical stock or CFD systems find they need some adjustment time to get used to these kinds of forex systems!

So there you have it.
The above points should be kept in mind when checking out various forex trading strategies and deciding which one is worth learning.

If you know what you're looking for, you'll save time and effort later on as you would have chosen a system that was worth learning and trading! If you're inexperienced at assessing systems, keep practising, and you'll soon get an idea of the actual returns and drawdowns that currency trading systems are capable of (without the hype).

Mark Hamburg helps you to go from forex trading novice to actually understanding what forex trading systems are all about. To get more valuable tips, hints and tutorials on successful forex trading, go now to his site on successful forex trading to grab your tutorials!
Article Source: http://EzineArticles.com/?expert=Mark_Hamburg

Article Source: http://EzineArticles.com/226057

Currency Trading Systems - Making Money from the Longer Term Trends

By

Currency markets never sleep and several trillions dollars are traded everyday, making currencies the world's biggest and most exciting investment market.
In recent years, mechanical currency trading systems, using technical analysis to predict trend movements have become increasingly popular as a way of locking into, and profiting from the longer term currency trends.
Making Money from the Longer Term Trends
Currency trading systems are ideal for making profits from longer-term currency trends, and they occur in all currencies.
The longer-term trends in FOREX markets reflect the health of the economy.
As economic cycles are relatively long and take years, so do the currency trends that reflect these cycles.
A good currency trading system can enable traders to lock into, and make profits from these longer-term trends.
When choosing currencies to trade, it is important to have good long-term trends, but just as important is liquidity, which enables traders to lock in profits and exit losing trades quickly.
Currencies that offer good trends and liquidity include:
· The US Dollar
· Swiss Franc
· Euro
· Japanese Yen
· British Pound.
Currency trading systems remove emotions from trading, which is the major reason the majority of traders end up losing.
Removing the Emotion from Trading with Systems
There has been plenty of material written about using currency trading systems, and the works below provides informative reading for anyone thinking of using a currency trading system.
Traders should try to read the following authors:
Edwin Lefeurve, Jake Bernstein, Larry Williams, Ken Roberts, Van Tharpe and Jack Shwager whose books "Market Wizards" and "The New Market Wizards" interview some of the most successful traders of all time, including the "turtles". The Turtles are group of traders who had no prior trading experience, but went on to earn hundreds of millions of dollars, using very simple mechanical trading systems.
Currency Trading Systems that Make Money
The developments in recent years in computer software, the growth of the Internet, and online trading, has seen currency trading systems become more popular than ever.
Software Packages such as Tradestation, Supercharts, Omni trader, and many more, allow traders to back test systems, using a variety of technical indicators that include:
· Stochastics
· Bollinger bands
· RSI
· moving averages
· ADX
And many more.
The currency trading system picked can then be analyised, to see how it would have performed in the markets with commissions and slippage deducted.
Traders, who don't want to develop a currency trading system, can buy systems off the shelf from vendors.
How do you Choose a Successful Currency Trading System?
If you are buying a currency trading system, there are several things to consider before parting with your hard earned cash:

1. Are you interested in being a day trader, or a trader looking for longer-term trends? You need to pick a system that you're comfortable with and this is mostly down to personal preference. Some traders like the excitement of day trading others prefer a longer-term approach.

2. Do you want to have any input into the system, or do you want it to be totally mechanical?

3. Do you want to trade just one currency, or a basket of currencies? Using a currency trading system that trades just one currency can be more profitable but keep in mind, the converse is true, i.e losses and drawdowns can be larger.

4. When choosing a currency trading system you need to have confidence to trade with it, and follow the system through losing periods. To do this you should know the logic the system is based upon. If you understand the system and its logic, you will derive confidence and be more likely to follow it - in contrast to one where the logic is not revealed.

5. What are the average profits you can expect in relation to drawdowns? All currency trading systems will have periods of drawdown and losses. Generally the larger the profits the bigger the drawdowns tend to be over time - so pick a system that reflects your investment aims and risk tolerance.

6. When you are buying a currency trading system, check out the system seller's experience, track record, customer support, - and whether they have a real-time track record, or a hypothetical one.

A real time track records means the system has performed in the market and made money, i.e it's proven. Trading systems that simply rely on hypothetical track records mean they have been back tested, - and with the benefit of hindsight we can all make money!

While hypothetical track records should be treated with a degree of caution, you can find out a lot about whether the system is likely to make money, by knowing the logic the system is based on.
When considering a hypothetical track record, look for one where the logic is revealed and not a "black box" system where you have no idea how to system works.

In conclusion, you can make your own currency trading system, or you can buy one from a vendor - when choosing one from a vendor make sure you do your homework, and remember - if it looks too good to be true, it probably is!

Currency trading systems can, and do make money, and the effort you put into finding the system that suits your personality, risk tolerance, and profit objectives, will be time well spent.

We have lots more currency trading articles to help you sharpen your trading skills, on our web site. New! Free Currency Trader CD available through our web site! You can grab this valuable CD, which contains 9 critical reports on how to improve your trading. Everything you need to trade successfully is enclosed, including tips strategies and trading systems [http://www.tradercurrencies.com/trading-currencies-articles-sitemap-2.htm].

To claim your free trading CD, visit our web site now ==>[http://www.tradercurrencies.com]
Article Source: http://EzineArticles.com/?expert=Stephen_Todd

Article Source: http://EzineArticles.com/184625
 

Fibonacci Technical Analysis of Financial Markets


In a previous article, I showed how it is entirely possible to make profits in trading the financial markets, by using simple Fibonacci sections of waves that occur in all markets. This has the advantage that simple Fibonacci charts can be used, without the need for complicated technical indicators.

The Fibonacci sequence is derived from the natural growth sequence of 2, 3, 5, 8, 13, 21, 34, 55 and on to infinity. I showed how the ratio of each number is related to the one before it by the ratio of 1.618.., and to the one just ahead of it by the ratio 0.618.. Interestingly, these ratios still apply if any starting point is chosen! So that a sequence starting at, say, 15, would have the sequence 15,15,30,45,75,120,195,315, and so on. This would produce the same ratios of 1.618 and 0.618! The Golden Ratio, or Golden Mean, 1.618, is given the name phi.

Growth in nature (rising markets) is expressed by 1.618 and 1.618 squared ( = 2.618). Decay (falling markets) is expressed by their inverse fractions, 0.618, and 0.382. But of course, growth of all natural things takes place in spurts, followed by set-backs, and then another spurt, and so on (3 steps forward and 2 steps back). Through observing many stock charts, early technical analysts discovered that when a market makes a solid move (up or down), then the corrections often stop at Fibonacci numbers of 0.618 (61.8%) or 0.382 (38.2%) of the wave's move. Further out, if we look at 1.618 cubed (4.236), its inverse is 0.236 (23.6).

This can work on very short-term charts and even monthly charts. A good example is that of the British Pound/Dollar. At the start of 2008, the Pound was trading around the $2.00 area, but then suffered a massive decline starting in July 2008 and bottoming in January 2009 at 1.3460 area. It then staged a strong rally, topping at 1.7050 area in August 2009. It has since then dropped to a recent low of 1.4216 on May 20th 2010. This level represents a 76.4% retracement, or 23.6% from a complete retracement. The chart looks very beautiful. I have been looking for a low-risk entry point to go long since then.

I have found that deep retracements of 61.8% and 76.4% are very common, and often give us a low-risk entry point for a trend change. If I do Fibonacci charting to find a retracement level with a complete 5- or a 3-wave Elliott pattern, together with a divergence in a momentum oscillator, then I have a very high potential winning trade. Choosing Fibonacci retracements allows me to place close protective stops (in case I am wrong).


If you ever wanted to know how to make money trading the financial markets, you have come to the right place. I was a professional futures trader for many years, and have seen just about everything the markets could throw at traders.

Visit my websitehttp://financialtradingstrategies.com where I offer resources that I personally recommend. To look over my shoulder and sneak a peek at my trading in real time, visit my blog http://financialtradingstrategies.com/wpblog/
FTSTrader

Article Source: http://EzineArticles.com/?expert=John_C_Burford

Four most important trading skills You Won't Learn in Forex School

important trading skills Forex School


1 . Thinking long term rather than short term


Most traders starting mistakenly believe the hype that the currency market is a place where you can make a fortune overnight . Good forex school teach their students the fundamental lesson that it takes time to make money. Trying to make a lot of money in both markets can only end in disaster if you're really lucky. Keep in mind that the only way to earn consistent profits in the forex markets is to negotiate the use of leverage, but also significantly increases the amount of money you can lose .


2 . Learn to be patient


It takes time to learn how to trade successfully , rather than thinking that after only a few courses , you will be successful at a time . In addition to the courses that you will learn in Forex school  , will also have to spend hours of practice with demo accounts before real accounts . They say that it takes 10,000 hours to become an expert in something, and you have to put invest all the needed time to develop a successful strategy , because won't happen overnight .



3 . Develop a trader mindset not a gambler one


A trader must accept his losses because nothing is worst than letting running losing trades  rather than closing then when it's against him and hoping that the trade will reverse in  his favor .



4. Managing your risk


Every time you open a trade, there is always the chance that will go against you and you lose your money . For this reason, you must develop skills of risk management that will help you manage your risk so that you will be able to make successful trades . An example of risk management is to trade just the amount of money you are able to loose of your trading capital . This will limit your losses in case you fail to reach your take profits targets . Of course, this does not prevent you increase the amount ventured on your trades in case you feel the market is in your favor.

Top 10 Investment and trading Books every Investor Should Read

Top 10 Investment and trading Books every Investor Should Read
Photo by Olesia Buyar on Unsplash



Internet can be one of the best and fastest way to learn to invest. But if you are looking for a historical perspective on investment or analysis of a particular topic, there are several classic books on investing for great reading. Here we give a brief overview of some favorite investment books of all time and put you on the road to investing knowledge.


"Irrational exuberance" (2000) - Robert J. Shiller 
 Shiller's book, published in March 2000, gives a chilling warning of the imminent collapse of the Internet bubble. The Yale economist discredits the myth that the market is rational and explained in terms of emotions, herd behavior and speculation instead. In an ironic twist, "irrational exuberance" was released almost exactly at the forefront of the market.


"Learn to Earn" (1995), "One Up On Wall Street" (1989) and "Beat the Street" (1994) - Peter Lynch 
"Learn to Win" targeted younger audience and explains many business , "One Up On Wall Street" makes the case for the benefits of self-directed investment, "Beating the Street" focuses on how Peter Lynch picked winning (or how he lost them) while managing the famous Magellan Fund.the three books follow the 'common sense approach, which emphasizes on the fact that small investors take time to do their homework, it can perform as well or better than the experts.


"Stocks For The Long Run" (1994) - Jeremy Siegel 
A professor at Wharton School of Business Jeremy Siegel is the case - you guessed it - invest in long-term actions. It is based on extensive in the past two centuries to support not only that actions beyond all other financial assets, when it comes to performance, but also that equity returns are safer and more predictable against the effects of inflation.


"Common Stocks And Uncommon Profits" (1958) - Philip Fisher 
"Actions common and uncommon profits" teaches investors to analyze sectors and companies and its ability to produce profits. Originally published in 1950, Fisher lessons are still true sixty years later .


"The Intelligent Investor" (1949) - Benjamin Graham 
A classic bestseller of Benjamin Graham, perhaps the most influential investment figure of the 20th century, The Intelligent Investor has taught and  inspired hundreds of thousands of people worldwide. Published for the first time in 1949, Benjamin Graham's book still the most efficient and respected guide to investing, due to his timeless philosophy , it is interesting to read based only on the testimony of Warren Buffett "By far the best book ever written on investment."


"A Random Walk Down Wall Street" (1973) - Burton G. Malkiel 
This book popularized the idea that the stock market is efficient and that prices follow a random walk. In essence, this means that you can not beat the market. That's right - according to Malkiel, no amount of research, fundamental or technical, will help you in the least. Like any good academic, Malkiel defend his theories with a lot of research and statistics.


"Rich Dad Poor Dad" (1997) - Robert T. Kiyosaki 
This book explains several lessons about money that are being taught to children by their wealthy parents,
the middle class and poor parents neglect.
Robert Kiyosaki has a very simple message but it's a very important financial lesson that can motivate anyone to start investing: the poor make money working for it, while the rich make money by letting their assets doing their job. We can't find a better book to buy for your children's financial education.



 
"How To Make Money In Stocks" (2003, 3rd ed.) - William J. O'Neil 
Bill O'Neil is the inventor of the CANSLIM system. If you are interested on choosing the best stocks,Reading this book will give you a strong system that you can set to work immediately in your search.


"The Essays Of Warren Buffett: Lessons For Corporate America" (2001) - Warren Buffett and Lawrence Cunningham 
it's actually a collection of letters that Buffett wrote to shareholders in the last decades. This is a work of gathering techniques of one of the best investors in the world.


"Common Sense on Mutual Funds" (1999) - John Bogle 
This book begins with an introduction to the investment strategy before jumping to the mutual fund sector for exorbitant fees they charge investors. If you own mutual funds, you should read this book.


What Are Penny Stocks And How Do They Work?

Expert Author Matthew I Arthur
You might have heard a lot of people talking about penny stocks, and by investing in these stocks they were able to gain huge returns. You might be interested in investing in penny stocks to double your money fast. But, before blindly investing in penny stocks, it is very important for you to clearly understand what these stocks are, and how you can invest in them wisely, so that you can make a lot of money through this simple investment.
Introduction To Penny Stocks
The general description or feeling about penny stocks, is that it is a stock that trades for under $1. But, this is not the true definition of a penny stock. They are trading stocks on the stock market, and the biggest difference that you would see in the penny stocks and the blue chip company stocks is in the price of the stocks. Penny stocks are simply share prices of the smaller companies, small technology firms, mining companies and start up companies. The price per share of such smaller companies is very low when compared to multinational companies. Many people interested in doing stock trading invest their hard earned money in these kinds of stocks. All you need is a few hundred dollars to get started with a batch of developing pennies.
Is There Benefit In Investing in Penny Stocks?
Once you get to know what penny stocks are all about, the very next question that would come to your mind is the benefit that you will be able to gain by investing a small amount of money in the shares of small companies. Well, the best thing about these small stocks is that if it experiences a move in the price, this move will often be a huge and dramatic one in terms of percentage. If you are looking to gain good revenue through your investments, then you need to be working the percentages and investing in penny stocks that have a good chance of gaining in percentages.
Best Way To Start Investing
If you have a chat with leading financial experts and stock brokers, then they will all vouch that investing in penny stocks is the best way to step into the world of stock investments, solely for the purpose of learning. You will be learning the tricks of the trade of stocks and shares by investing in penny shares. They are the cheapest way of investing in stocks as you might even find certain stocks that are valued at 40 to 60 cents and you can even invest in hundreds or thousands of shares without needing to break the bank. You can also learn the nuances of stock trading through these tiny stock investments.
Never Worry About Cheap Stocks
The thought that you are trading in cheap stocks should never ever strike your mind when you are trading in shares. These lesser valued investments can change the fate of your life in the shortest possible time as any one of them can easily skyrocket in value very soon. As there are only a few traders who will be investing in these types of stocks due to its cheap value, there is every possibility for it to double, triple or even go up four times its initial value in a space of a few hours, or even sometimes in a few minutes time.
There's Also A Risk Factor
If you can make huge gains from penny stocks, the other side of it is that you could also lose all your money on a cheap stock that you have bet on. There is risk involved in any kind of investment, let alone pink sheet stock investments. Hence, if you are interested in trading in these stocks the safe way, then you need to depend heavily on analytical micro stock choosers. They are the perfect stock pickers who will be able to easily anticipate the behavior of the stock market and their main target is only the cheap stocks.
Invest With Caution
Even though penny stocks offer a large chunk of profits, these shares are quite vulnerable to be manipulated. If you are not very careful and cautious in picking out the right stocks, you can easily lose all your money that you had invested. It is important for you to find the honest and real small organizations to invest your money, as such investments will offer you tons of potential to earn handsomely. If a company seems to be having a bright future and is a promising small organization, then you can very well invest in their small stocks to get a hefty return on your investments. All you need to do is to take time to do research on the internet to spot such promising companies and you are sure to gain good payouts.
Tips To Invest In Penny Stocks
The following are the tips that you can use when you are thinking of penny stock investments.
  • Do thorough research and proper planning before investing in pink sheet stocks of a company.
  • Start out with small investments and slowly increase your investments on penny stocks.
  • Invest in companies that have huge average trade volume.
  • As penny stocks are highly volatile, always have an entry and exit plan ready and stick to that plan always.
Advantages
  • Trading in penny stocks will be your guide to learning about the stock markets and how they perform.
  • It is very easy to start penny stock trading as you do not need to put in a lot of investment.
  • You have the opportunity to make more money in the shortest possible time by investing in mini stocks.
  • These micro shares can also grow up to be traded in the stock market as mid cap stocks, thereby multiplying its value many times.
What I Think
It is important for you to invest in micro stocks with a little bit of caution and thorough planning. Make sure that you do not invest in stocks of companies that often go up and down, and this is especially important for anyone who is new to small stock trading.
For More Stock Investing Info Visit: http://investorchamp.com