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These days getting great returns on your investment is possible without large sums of money and long investment horizons. This is when penny stock profits come to your aid. These are the stocks are usually priced at less than 5 dollars per share and are traded in OTC or pink sheets rather than fancy exchanges like the NASDAQ or NYSE. These investments can yield superior gains of 50-300% within a smaller trading window like 3 months.

Do you want to know how to day trade penny stocks successfully? These rules will help you choose the creme de la creme of the penny share market.

Financial statements that are audited by a third-party accounting firm is where you should begin. The profits are important but just looking at the final value on the bottom line is fraught with danger. You never know who to trust when it comes to the smaller companies that aren’t as well regulated as the larger firms on the bigger exchanges. Know the growth story and whether the company has any serious competition. Knowing the factors for driving the growth of this company is important atleast in the short run.

2- Its time to look at the management team. What makes them good leaders? What drives them and do they have other success stories that add credibility? Are they ethical?. These answers will help you figure out whether you are ready to buy penny stocks.

3) I hope you didn’t think you will not have to use Price/Earning ratios. This is one of the basic mantras of investing in the stock market. If you want to know whether the company is undervalued, fairly valued or overvalued, this value is your best bet. Dont worry. It might seem difficult at first. But with some practice, you will become a pro at this.

You should use the above pointers starting out. When its time to pull the trigger and buy or sell the stock, you should keep in mind the shape of the whole economy. Bear in mind the market trends – upwards like a bull market, downwards like a bear market or neither i.e. going sideways.