Several things to look out for in regards to penny stocks to avoid bloodshed in the future.
The following is my personal opinion and not financial advice.
1,
HC is a good discussion platform when it comes to general research and chart discussion.
It does as a whole though follow the same dynamics as the market, hype and fear.
When everybody gets close to their alpha male/ female inner self and feels the need to crush alternative views which deviate from blue sky predictions, it is usually time to sell.
When hords of "trolls" as my teenage kids would call them, invade a thread it is usually a sign that a group of retail investors hunting in packs preparing for an entry.
That results though often in generalised agenda driven accusations, ripe on this thread as on ony other, for that reason.
Do your own research.
2,
Ask yourself if a broker was involved prior to a massive share price increase. Know who is behind the pump and who profits from it.
3,
Watch for directers buying or selling. In our case, director sold above 10 cents, which is a red flag.
4,
Study pump and dump info plentifully available on the net to be aware of the psychology behind it. They are based on the panic to miss out and connect emotionally to a stock. Remember that you pay, at least partially, the directors wages, they don't pay you.
5,
Only commit long term funds when revenue backs a share price rise.
6,
A rerate is mostly linked to instos backing the rise. In the adsence of such, stay away as the likely dreadful decline after the pump is the norm.
7,
Check share register, who holds the most shares, how high is the percentage of retail investors, how vulnerable is the register to short term traders. How many shares are on issue.
8,
Check the past. Has the stock undergone similar massive rises with subsequent declines.
9,
Has the stock a history of being a sleeper with sudden moves.
10,
Have directors been involved with other companies which went flat.
11,
Is the market into which the company is pushing highly competitive and has short product cycles?
This will make it harder to predict continuous revenue flows.
12,
Listen to your gut, you usually know when you have been played.
Biggest mistake is to ignore the inner warning and cling to hope.
13,
If share price is allowed to fall and broker still being invested, what does that tell you?
14,
If you sit on a massive loss, wait for high volume marking a bottom, averaging down on a falling knife usually only increases the pain.
The bottom can not be missed. No need to buy in at the lowest possible price, in fact waiting for confirmation usually pays.
Good luck,
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