The Fundamental Analysis Benefits for Penny Stock Investing
According to the benefits of technical analysis previously discussed supposedly all fundamental factors affecting a stock's value are already figured into the charts so an investor can quickly discern trading trends without having to research all types of fundamental data affecting that stock. . .
But is this true in reality?
• Fundamental data is figured into technical data, but often far too late to screen potential stocks. Too late to plan and profit from explosive trends in share prices of select stocks.
• Fundamental Analysis is able to help the human mind discern and locate highly profitable investments with great accuracy far enough in advance to plan ahead for that investment.
• Technical analysts will not show the mind of understanding why a penny stock will, or will not, trend up or down, or how far, or that such a price move is imminent like fundamentals can. . .
For instance, you have no way of knowing what the quality of the company is, or what type of products it has in development, or a host of other fundamental factors. Such information has a critical impact on the true value and perceived value of the penny stock presently and in the near future.
Technical Analysis is far more accurate in displaying technical patterns predicting future price movement of stocks that actually have a genuine growth trend pattern to follow based on actual sales, profits and PE ratio of a company. Those values are missing in penny stocks; so, no real trend to follow or register on a technical chart until its happening.
The trend will happen, not on growth patterns of the stock, but rather on media promotions and news updates that only fundamentals can reveal.
So, how do you tell a genuine technical pattern from a false one?
Answer: By viewing the fundamentals.
Sure a trader can track technical patterns and indicators for a penny stock, but such information has always proven to be generally inaccurate and flawed for reasons that were discussed under the pages about technical analysis on this site.
Briefly, most such technical patterns are false when predicting penny stock movement, unless fundamentals confirm that the pattern is genuine.
Complete Fundamental Analysis Essential for Successful Penny Stock Investing
Fundamental study of developmental and exploration companies will identify or locate penny stocks for you to watch that are genuine with experienced management, exciting novel products in development, patents, financing in place for at least 6 months, or the ability to obtain such financing, and a number of other fundamentals that this site will cover repeatedly.
Penny stocks generally have no sales and profit statistics on which to gauge a growth trend; so, the only way to discern a potential trend in penny stocks before it happens is by study of the fundamental assets the penny stock has.
Fundamental analysis can, therefore, show you which of those target stocks have high potential for explosive upward trends or warn of impending downward trends long before genuine technical signals form. Thus you have time to plan your trades.
Fundamental Analysis Benefits studied in practice...
Obviously you will only invest in a penny stock on good fundamentals before exciting news hits the media, but on IF
1. all other fundamental data provide necessary background data on which to base success on good recent fundamental news.
2. technical indicators confirm that the value of shares at the moment in comparison to long term and recent history is a bargain when taking into account all fundamentals.
If historical prices on technical charts show that the price per share is climbing slowly or quickly, then you will likely pass on investing in that stock despite good fundamental data. . .
The marketeers or other extraordinary investors are already loading up on the stock. At that point, the Extraordinary Investor who is not already invested in the stock, does not care if the stock might go 200% higher, because the risk of the stock plunging in the short term is too great. Once you become familiar with penny stock investing you will believe what I am saying.
Even so, you may wait when or if the share value drops sufficiently to create what you feel is a bargain if fundamentals still look exciting and if the stock itself looks "exciting". Don't take risks, plenty more fish in the sea.
Best ways to limit risks when investing in penny stocks:
If the recent share price of a well researched high quality and high potential stock is at an all time historical low, then the likely hood that the share price will break below, or much below, that lowest share price is highly unlikely. This is true if the historic low occurred during the last recession.
If the stock does not have enough history trading, then the historic low has not been tested by a negative economy. In this case, the true historic low most likely has not been reached yet.
Buying up shares of a confirmed high quality sleeper penny stock at this lowest share price will put you in the best position to minimize risk, take advantage of the risks of other traders, and ride the wave of an explosive trend once media and marketeer involvement take place.
This site will help you develop good judgment in determining "exciting" stocks that are trading at a bargain while eliminating needless risk taking.
Mastering Your Emotions over Risks for Successful Trading:
One of the major fundamental analysis benefits is that your emotions will be trained to know what is truly exciting about a stock by learning all you can about it first. In this way, your mind is able to form a complete picture of the stock. Your emotions will then work in your favor for your financial benefit
Other fundamental analysis benefits:
Although the task of studying the fundamentals of a particular stock seems tedious and daunting to most investors, it really isn't.
Even if I have to take the next month or two researching companies underlying penny stocks to find a few that are most likely to explode 20% to 100%, is that so hard?
Which do you feel is the easiest way to earn 50% or much more on your investment per year? . . .
1. The intense daily high leverage technical trading and thousands of trades per year of day traders?
OR . . .
2. The making of 7 to 20 trades per year using complete fundamental analysis part time as does the extraordinary investor?
Before you answer, take into consideration that some of the best day traders earn 30% on their investment per year while some of the best extraordinary investors earn at least 30% on their investments within 1 to 4 months and likely 200% on their total investment money per year.
Not to mention that extraordinary investing will put you into the unique position of making 300% to over 1000% profit on your investment on a single stock - that will happen sooner or later.
Such are the fundamental analysis benefits of the extraordinary investor!
And don't forget other day trading disadvantages. . .
• Add in the huge costs of broker commissions when multiplied by thousands of trades for day traders.
• Time and emotional drain of continually being on high alert to trade for many hours per day - that is reality of the day trader.
Contrast the major day trading disadvantages with the powerful fundamental analysis benefits and you can readily understand how fortunate extraordinary traders are.
The fear by many investors that fundamental analysis is time consuming, tedious, and of less value than technical analysis dominated trading is a marketing ploy that keeps investors
• stuck on technical formulas for mediocre profits.
• blind to the powerful fundamental analysis benefits of extraordinary investing.
Such marketing efforts hide the powerful fundamental analysis benefits, thus preventing stock traders from successfully trading penny stocks for huge gains in a fraction of the time.
Consider these additional fundamental analysis benefits in extraordinary investing...
• In reality, once you become familiar with using fundamental analysis to research companies of a particular segment of the penny stock market, as this site is revealing to you, you will know what to look for and where to look for the information very quickly.
• Fundamental Analysis of a penny stock company can be accomplished effectively in less time and far less stress as they reveal to you the hidden gems that technical analysis will not find.
• And any time spent on good complete fundamental data for penny stock trading is rewarded with far greater potential profits and minimal downside risks.
• In addition, the complete fundamental analysis of stocks also instills/rewards the extraordinary investor with a far greater understanding of the inner workings of the companies underlying penny stocks, and of the market, and of how the market reacts to different kinds of fundamentals of a type of company.
The invaluable knowledge gained by You of companies can be used to invest in them over and over for huge profits. Such research rewards the extraordinary investor far more than any other investment method in existence.
Reading Between The Lines:
The powerful knowledge gained by good fundamental analysis gives the investor the experienced ability to know or sense with uncanny accuracy if a stock will go up or down in value in the future with great accuracy. . .
How is this possible? Because you will be able to read between the lines fundamentals that have not been written yet that alert you to a potential explosive move in a penny stock. . .
This is accomplished by viewing present data (whether seemingly negative or positive) in light of all the background fundamentals of the company that determine the real worth of that penny stock. . .
For instance:
Given: A super solid penny stock with investment partners and alliances, and with more than a few exciting novel products in development, causes stock prices to rocket, and then continues to trade at a higher price for a month. This added value may happen because of the potential of exciting news soon to be published regarding development of one of its products. . .
This stock eventually plunges in value, knocking out 95% of the increased value from the month long rocket trend... This is common, and it happens because the awaited published news regarding one of its product developments is less than stellar, or turns out to be a flop.
What will the extraordinary investor do?
The extraordinary investor will consider this an extraordinary buying opportunity. Why? Because this is a solid penny stock representing a company that is developing more than a few highly promising products. So, one product failed during its testing. However, this fine company has other super products in development. . .
Considering this, the extraordinary investor reads between the lines, and sees that this stock is way oversold by panicked and upset traders, and that the stock will easily and quickly rebound perhaps 40% to 50% of the value lost by the plunge.
What I have just illustrated is common. Extraordinary investors are ready to take advantage of these opportunities to make big money fast and easy with low risk.
I will provide other examples of "reading between the lines" as you continue your Journey on this site.
The Mysterious Sixth Sense of Successful Penny Stock Investing
Taken beyond "Reading between the Lines," the Mysterious Sixth Sense of Successful Penny Stock Investing is the experienced talent to discern the over all explosive potential of a stock trading at a fundamental bargain.
If the stock is a truly high potential stock, you will have many opportunities to invest in that stock as share prices cycle down again.
You sell when that stock explodes on more exciting news or media promotions. Then wait for the share prices to cycle down again.
Why do Penny Stocks Cycle up and down over time?
Solid high value penny stocks will cycle up and down like this because they are developmental - very little, if any, product sales, and usually no net profits. These companies are usually in debt, which is the norm.
The real value is determined on the next piece of exciting news on product development, financing, VIP interest, and a number of other fundamentals that add temporary perceived value to the penny stock.
Mysterious Psychic Abilities - NOT
This extraordinary insight is not gained by telepathy or spirit mediums or superior alien psychic powers, but by a
• seasoned knowledge of how penny stocks work, and how such stocks work within a sector of stocks you are targeting, and within the the economic and political conditions at the time.
• good understanding of the particular stock of your focus.
Fundamental Analysis Benefits at Work! You do all this by the continuous study of companies within the broader market using solid complete fundamental analysis with basic technical data as confirmation.
This site will show you how. Not as complicated as it sounds - believe me!. . . but you have to do this right or you will fail.
Fundamental Analysis and the Investor Advantage
The fundamental analysis benefits of successful investing are what give the extraordinary investor the Investor Advantage over all other investors and traders.
Complete Fundamental Analysis as this site teaches
Most of the information you need on fundamentals can be accessed off the internet in a very short time for free or at a small fee.
In some cases, especially when researching Canadian mining companies, you will do well to call the company and speak with a representative, even developing a relationship with them. This tactic can be of tremendous benefit in determining successful trades - Canadian mining stock trades in particular.
Studying a penny stock on complete fundamental analysis with minimal technical data is actually far less time consuming, less tricky and far more accurate and rewarding then attempting to follow a penny stock using technical analysis and complex formulas.
In my 27 years of investing, I have never been successful trading penny stocks until I learned to rely on fundamental data. The fundamental analysis benefits of extraordinary investing are far more accurate and therefore rewarding than any other form of earning an income.
Invest in Penny Stocks with Peace of Mind and Solid consistent Profits
The least risky, least complex, least stressful and far more rewarding way to invest is to locate penny stocks at bargain prices that are about to explode in value using solid fundamental analysis and then trading those stocks as an investment in companies.
Unlock Your Investor Potential with Complete Fundamental Analysis
What this site will show you to do in successful penny stock investing is how to unlock all the fundamental analysis benefits to your mind of understanding.
By doing this you will develop the talent to invest the right amount of money in the right stocks at the right time.
When this is done, the stock's shares will eventually begin to sky rocket and will eventually jump in price at least 10% and as much as 300% or more within hours to a few months.
The Right Time to Sell - Important too!
Then I will show you the right time to sell your shares for a huge profit. Do not underestimate this step. Most losses are incurred by traders when they
• hold onto shares too long
• not holding shares long enough,
• are stopped out of a good trade because they used a stop order that was not set low enough to account for temporary swings in prices.
Don't Fret if you Lose Out on a Good Trade - Plenty More! . . . Better to be Safe than Sorry
Penny stocks commonly jump 30% or more and then fall again within hours to a few weeks. After the share prices fall again, they usually trade at a higher price than they did before they exploded for months. This may still be an excellent buying opportunity at the now higher valuations if key data from good fundamental analysis concurs.
Don't fret if you lose out on an explosive jump in a penny stock, because plenty more opportunities will present themselves. Don't ever be lazy in your investing research and trading. Do not gamble your money away by risk taking.
Never chase a stock if it's already shooting up like swing traders do.
When trading penny stocks the share prices could and will generally come down again sooner than you think and you will be positioning yourself to lose. Please do not chase stocks higher. . .
Chasing an explosive move in a penny stock is extremely risky. Also, the percentage profit (if the trade is profitable at all) is far less if you chase a trends up.
The choppy price swings of 5% or more you see during and after a stock explodes are common.
A change in trend brings with it buying and selling opportunities for traders.
• Many of those investors who had been holding onto their shares of stock sell at least some of their shares to take profits or to prevent further losses.
• Other investors will be jumping in to invest on dips in prices. And most investors become disoriented, not sure what the shares will trade at next. This basically causes the choppy price swings and sideways price trend after an explosive move.
I do not trade Choppy Action
I, personally, am not interested in investing off of these choppy price swings. The fundamental analysis benefits are most powerfully utilized and seen in the targeting of penny stocks with high potential to explode in value soon and invest in those moves, but only if the share prices are at historical lows.
Notice I am after SAFE trades. Not into Risk Trading. I need Peace of Mind. I need Low Risk and Consistent solid profits. I don't want to be biting my nails in anticipation for hours, days or weeks. That is emotionally draining - plus, its no fun! I want to enjoy trading stocks for many years to come.
There is no way around it - solid fundamental analysis is key to locating explosive trending stocks trading at a bargain.
Just because a stock is trading at an historical low, or recently plunged in values, does not make it a bargain! Fundamental research of the company will reveal the stocks value and potential as a rocket stock. . .
This is the least risky, least aggravating, and most highly rewarding way to invest in penny stocks. Investing this way requires minimal time watching the stock.
Swing trading and day trading is aggravating and risky and can emotionally and physically drain most people over a short time.
Technical Knowledge and choppy trending...
My suggestion to you is that, unless you are knowledgeable and experienced with using the tools of technical analysis, you do not invest on the choppy swings after an explosive move. Good Fundamental Analysis benefits far outweigh any apparent benefits of technical trading choppy price action.
But even with good technical knowledge, such swings are still too erratic or unpredictable creating great risk even if solid chart patterns of trading activity appear to exist. There is nothing really solid about choppy price action. Choppy Action means Unstable.
Unstable = Unpredictable = Unsafe = Risky.
You have completed this subtopic on Fundamental Analysis Benefits.
Although this subtopic does not fully and neatly categorize all the fundamental analysis benefits, what was accomplished here is to help your mind review, recollect and better comprehend such benefits in the light of the risks others take in penny stock trading.
Next lesson: Penny Stock Investor - Recipe for Success. I place this subtopic here because it nicely adds more knowledge to the fundamental analysis benefits so far described.
When you are ready. . .
Please click on: Successful Investor