Share Attack: 80 great tips to survive and thrive as a trader by Malcolm Stacey

Author:Malcolm Stacey [Malcolm Stacey]
Language: eng
Format: epub
Tags: Business
Publisher: Harriman House
Published: 2015-08-02T16:00:00+00:00

How to make even more money with penny shares

One characteristic of penny share companies is that there is less news to affect them than bigger outfits. Therefore, their price can stay static for many months. Actually, it’s worse than that. If no developments come, neither good nor bad, the share price will slowly erode. It’s depressing.

So why entertain the cheapos at all?

Well, the lack of activity and gradual decay is more than made up for when the share finally reacts to an event. One day, it will shoot forward like a starving terrier after a fat rabbit. The action can be so dramatic that your share will double or treble in a few days. (I’m emphasising this previously-mentioned point again because it’s important.)

All right, it may not be common, but penny shares have rocket motors when they finally launch. Medium-sized companies cannot hold a candle to such value-adding power. And as for Footsie lumps – I’ve never known one rise by more than 50% in a week. And if a jumbo rises more than half its value in a year, well, it’s quite a rarity.

Even so, it’s best only to consider investing in a cheapie if it has already started to put on value. Then you are buying into a rising share. Involving yourself in a share when it’s stagnant means you’re tapping into a fallow period which might last for months. This isn’t productive.

In my experience, a penny share starts rising on good news of its own – not happy sentiment in the market as a whole. This is another reason to consider the pennies. They can ascend when the Footsie and the rest of the market is in decline. I often make real money on a bad day for shares because I keep a chunky stable of penny shares.

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