Source (Guijarro85)
Source (Guijarro85)

Another invaluable lesson to be learned at the beginning is to never chase a stock that is running up quickly.  Again this rule applies even more so to penny stocks than other securities.

Canadian Penny Stocks can be particularly volatile creatures that are often tied to commodities prices as well as company specific happenings.  Prices can rise literally double, triple or more during a single trading session.  It can be tempting to watch a stock rising quickly on opening and wanting to get in on the action.  But the hard truth is that you’re probably too late.

When it comes to penny stocks it can be possible to fall victim to pump and dump cycles.  Although it is possible to game them, more often then not it’s not a game worth playing.  Focusing on company fundamentals, news or even technical analysis are all more likely to deliver you with considerable profit opportunities.

There are always stocks on the move so don’t give up.  Just because you’ve missed one doesn’t mean that you need to get in and suffer through the pain of a pullback.  Stick to your homework, examine some of the stocks that follow the run-up, pullback cycle and with practice you’ll be spotting these companies before the big move.

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