Investments, Penny Stocks, Futures and Trading

[wormy]

Are any of you folks into penny stocks? A risky investment, but something that can earn you a lot if it does well, or break you if it collapses. Obviously spreading the risk into multiple projects would help here. I've heard of a lot of people dumping funds into startups that were already sucking in venture capital and then making it big but never really looked into it. I guess I have always been a bit shy of this niche after watching an old movie called Wall Street with the Sheen duo and still remember Martin Sheen's rant about how his son should live off being productive rather than "the buying and selling of others".

I have heard of business and finance students working the markets part time to pay tuition, some of these people I know have bragged that a couple of their penny stocks jumped tenfold in less than a year. Sounds incredible but I never had the chance to actually verify the story. Anyone can make things up also of course.


Then we have the Options and Futures market which is more of a leveraged betting game. Risky but supposedly worthwile if you know the game like the back of your hand(which I don't btw).

I have been told one needs 5-10Gs to start playing after learning the ropes and I was told that my first book should be Graham and Dodds - Security Analysis. Said to be the most dry book there is, but is the financial bible.

Me, I keep hearing about others supposedly doing well but I keep telling myself that it would involve investing a lot of time and effort in learning the ropes with a dubious outcome. On the other hand it would also give me a certain "sophistication" where I wouldn't ever feel left out in a casual conversation regarding stocks which isn't a very nice feeling when it happens--you look and feel like a dunce.

So has anyone else toyed with this idea or even tried their luck(after learning the ropes of course) at futures, options or derivatives? Or does this niche scare off most of the people here and you prefer to nurse your own projects?

[pendelton]

I have, but limited myself to getting in to a deal a frind of mine did with ITT Hartford. We invested in the high risk category and we were making 18% on our investment at the best of times, and we never suffered a set back. It fell apart when he got an inheritance and closed down his business, cashing out the fund too soon, and we took a beating on taxes.

The lesson I learned is to do it yourself, or through a real brokerage.

I looked at penny stocks, but most of them want you to drop $1k to $5k to buy, which is a lot to risk on such an unknown.

Looking, or being, un-knowledgeable can help at times, if you display an interest you may be surprised at the amount of information people will give you. It strokes their ego to be able to show you how smart they are.

[lokesh05]

I invested in penny stocks and did some future trading, but in the Indian market things have been gloomy since mid-january after fears a US recession! :(
have lost half of my income (nearly). now, looking for long-term gains!

[wormy]

Lokesh05 sorry to hear that, have you considered playing the game with fake money for a few months before you bet your real funds? I know there are a few simulators out there for the stock market and there may be some for penny stocks as well. The problem with real stocks is the emotion involved, however if one is well practiced on simulators then it can only help, right?

[rachael24]

It can def. help with dry runs. We had a finance class in college, where everything was fake money. It prepared us really well for using actual cash. I suggest trying it.

[lokesh05]

where can i find such simulators esp. focussed on BSE/NSE of Indian Stock exchange?
Do they actually help? i mean, simulation is something but the real world is different , which is more of running on rumors and fears!

[pendelton]

Most fake trading platforms are based off of their real programs, such as Oanda's forex platform, so you have the realism of the markets, just not the financial losses, or gains.

Try Market Watch (http://vse.marketwatch.com/Game/Homepage.aspx), StockTrak (http://www.stocktrak.com/2005Version/), Noble Trading (http://www.nobletrading.com/stock-trading-practice.php), and VVestor (http://www.vvestor.com/).

I am not sure which has BSE/NSE though.

[NikolloFrancheci]

No sane person would jump into the forex market blindly. You might as well set your money on fire if that’s what you’re going to do. Sensible investors study the market carefully first, learn the ins and outs of currency trading -- and even then, before they launch into it, they devise a smart forex trading strategy.


The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.Your strategy should begin with how much money you can afford to lose. That may sound like a negative outlook -- after all, the goal is to MAKE money, not lose it -- but common sense tells you that the forex market is a gamble. There are precautions you can take that will make you less likely to lose your initial investment, but there’s no way to guarantee it. Your strategy must allow for the possibility that you’ll take a bath, and for that reason you should never invest more than you can afford to lose.

Another good tip for your trading strategy is to avoid putting all your investments in one currency. What’s the old saying about eggs and baskets? Yeah, don’t put ‘em all in one. Spreading them out makes it much, much less likely that you’ll be wiped out, the way you would if you relied on one currency and it bottomed out.
As you prepare your trading strategy, make yourself aware of what the market is doing right now. Is it trending upward, or downward? What’s the general mood among traders? They all have a strategy, too, and are eager to know what others are thinking.

Consider also what your timeline is. How long do you want to stay in the market before taking your profits and getting out?

Your strategy must also involve learning the timing of the business. Timing is everything: Too late or too early and your potential profit evaporates. As you learn to gauge the market and make trades at just the right time, your profits will increase. A good strategy will factor in this learning curve and allow for a few mistakes at first.

Above all, to prepared to accept surprises when it comes to forex trading. Strategy can only get you so far. The rest is ingenuity and a little bit of luck.

[Fergal]

Welcome to Business Advice Forum Nikollo and thanks for your very useful tips and warnings regarding Forex trading. You can read about our very own Nazreen's journey in Forex trading here (http://www.businessadviceforum.com/showthread.php?t=1623).

[scifi]

I have heard of Forex robots till now . Idon't have any idea whether such robots do exist for other type of trade too!!!Do any body of you know about such robots..
But one thing is sure that all trades are associated with risk, some high, some low...at the same time is also true that- more is the risk, higher are chances of returns.:)

[Gil Burt]

It will be true that The market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.

penny stocks can give very good returns in the long run if careful research and planning has been done before buying them. They can be very profitable if you know what you are doing and you know enough to avoid the pitfalls. Consulting an expert in the trade before making a decision is advisable.

[jamal money]

if you wanna know what you getting into check out cnn money news

[MichaelFrayn]

It will be true that the market is constantly changing and is not always predictable, true. But you still need a strategy, one that allows for unknowns and surprises.