Underground Journal

How to Make Profitable Penny Stock Picks

Are you one of those investors that likes to pick high risk, high reward stocks but can never seem to pick even one profitable penny stock?  If this sounds like you it’s time to re-evaluate how you go about choosing high potential stocks.  What, you mean you just pick them based on a nice company name?  Jokes aside, there are specific things you should look for in a penny stock that can really increase your odds of picking a winner.  Here are just a couple of tools you can use:

MACD
The Moving Average Convergence/Divergence (MACD) is a very powerful technical indicator used by a number of professional investors and traders to analyze stock patterns.  It essentially measures whether a penny stock is trending up or down and can used as both a short term indicator, when measured in days, or long term, when measured in weeks. The MACD basically measures the difference between two exponential moving averages (EMAs), the most common of which are 12 and 26.  When the faster of the two EMAs (12 day) passes the slower EMA (26 day), a bullish crossover pattern emerges and is essentially telling the investor the stock is bullishly trending up.  This is personally one of my favorite technical indicators along with the RSI (Relative Strength Index) but should be used with other technical indicators in order to be most accurate.

Insider Buying
Another powerful way to aid you in finding the top penny stocks to buy, is to find out if insiders of the company own stock and are actively buying stock.  The main reason for this is if the executives believe that their own company is worth owning and is headed in the right direction, then this should tell you at the very least this company is legit and at best this company has the potential for awesome growth.

There are many other factors to consider before buying a penny stock so be sure to consult a licensed financial adviser prior to making any investment decisions.

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