To Buy or Hold Penny Stock

Deciding when to buy gas is somehow not unlike trying to figure out when you should buy shares of your favorite up-and-coming penny stock. It's all about understanding the relevant issues and timing.  Test your penny stock picking abilities by starting out paper trading.  That really is not a bad idea. 

There are only two simple rules to making tons of money with penny stocks: knowing what to buy and knowing when to buy (and sell).

Do some digging and hopefully you'll uncover a great penny stock company with (of course) huge upside potential.

Now, finding a good penny stock is one thing; knowing when to buy in, that's a completely different story.

Naturally it would be great to buy in at the 52-week low and sell just as its peaking. But the odds of that happening are remote. And maybe even a bit greedy. On the other hand, time your entry and exit strategy wrong and you could end up in the red.

To test your penny stock picking abilities, you can always start out paper trading. And really, that's not a bad idea. Unfortunately, the rewards just aren't the same. In fact, there is no real "reward" to paper trading...except that heart warming feeling that your instincts were right and you could have made money. Or knowing you didn't lose money.

It would be great if we could find a real-world application that tests our business acumen on a daily basis. One that doesn't kill the bank accounts.

Well...it just so happens that there is one. It certainly isn't brain surgery or rocket science...but you do need to know how to read the markets. And, if you read the signs correctly you could just end up on the winning side of the fence.

Every day millions of Americans drive past gas stations wondering whether or not to fill up their car; gas-up today, or wait until tomorrow? Will gas prices be up or down over today's prices? It seems the price fluctuates just as easily, and unexpectedly, as some penny stocks.

Deciding when to buy gas, on some levels, is not unlike trying to figure out when you should buy shares of your favorite up-and-coming penny stock. It's all about understanding the relevant issues and timing.

Right now gas prices are dropping quickly thanks to an early end to the summer driving season and the absence of devastating Gulf Coast hurricanes. In addition, on Wednesday the U.S. Energy Department reported that U.S gasoline supplies unexpectedly increased by 400,000 barrels this week. That followed another unexpected build of similar size last week.

Oil prices have also been declining. Earlier this week oil plummeted to $69 a barrel. With no major supply disruptions on the horizon, some say gasoline prices are poised to fall further. One analyst expects the price to drop to about $2.79 a gallon nationwide in the coming days.

But in this day and age, "cheap" gas cannot last forever. Nothing fuels the fire for rising gas prices like a little international fear. Most analysts don't expect oil to fall too much further in the short term, as demand remains strong and uncertainty surrounds supplies from Iran, Nigeria, and Venezuela.

Follow the trend of the past few days, and it appears as though it's time to gas up! Mind you...it's always best to gas up before a long weekend.

Your favorite penny stock operates the same way. A penny stock's revenues unexpectedly increase, and often, their share price will follow suite. Negative speculation abounds...and your penny stock's share could fall...or conversely, a hint of better times could send your penny stock higher.

No matter how you slice it, practice makes perfect. Or in the case of the stock market, practice makes you a bit sharper...and maybe richer.

So, if your strategies are helping you gas-up on the cheap, you may want to apply the same principles to predicting when you should buy your new found penny stock.

Predicting when gas prices are going to rise or fall a few cents may not seem monumental, but if those same principles can help you shave a few cents off your next penny stock...then that's something worth taking note of.

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