A Guide to Identifying the Best Stock to Buy
One of the most important lessons you can learn if you are planning to enter into the world of trading shares as a beginner is that you do not need a lot of money to start investing in the market. This is one of the main reasons why many new people opt for Forex or stocks instead of investing in mutual funds, bonds, etc. If you're like me then you probably heard of the term "Penny stocks" before and if you don't, let me enlighten you about how these stocks work. The word "Penny" in the name of the stock refers to how cheap these stocks are usually priced at about $5 or less. So you can imagine the excitement when you see a company with shares priced at $5 and more. It's like hitting the jackpot, in a way. This excitement and anticipation builds as you see that these shares are very scarce and you will probably make a killing if you invest wisely. You also need to be able to differentiate these stocks from the rest of the companies in the market. This is very easy to do thanks to some very simple criteria you need to look for. If you will find companies that have a much higher volume traded than other companies in the market and have a much higher PE ratio, then that's your signal to buy. There is no question these stocks are very cheap to start with. As you become skilled at identifying these stocks, your winnings will be exponential. These are the best stocks to invest in as a new trader if you know what you need to do to win. You will be able to beat the market, and make huge profits. If you are planning to buy Pennies, you must check out the company's financial reports. The company should have a really strong balance sheet and cash flow positive. If you see a lot of positive cash flow, and they are not currently making any negative cash, then that's your signal to buy. Finally, you should check out the trading volume. The more shares they trade daily, the better. If the stock trades more than 2000 shares per day, then that is a great signal to buy. When you have identified how to identify the best stocks to buy, you have to look at the financial reports for verification. I recommend you get a stock chart and start looking at the graphs and read the reports and graphs. You can also find articles on the web to explain this information. Make sure you understand the stock market and how to trade shares. This is a must if you want to be successful.