Whether you are interested in hot penny stocks or shares from more established Blue Chip companies, it is critical that you have a solid understanding of the basics of the stock market, terminology, and the players and movers involved. A good piece of penny stock advice is to understand what a market maker is and how it can affect your investment strategy and profits at the end of the trading day.
The experts at Investopedia define a market maker as "A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds."
In more practical terms, making money with hot penny stocks often revolves around the ability to quickly buy or sell. Market makers make that possible, quickly. In fact, thanks to such a firm's knowledge, experience, and leverage, this kind of transaction can literally occur within seconds. Unlike other broker dealers, those considered to be market makers not only offer the best stock advice, but have a rock solid understanding of the ask and bid price for any given share -- any time, any day.
What is the ask price? This is the lowest price that a seller is willing to sell his or her stock or bond, and must always be compared to the bid price, which is used to calculate the spread or the profit the money maker will make on the deal. The bid price, on the other hand, is the highest price that an investor is willing to pay for a stock or bond.
Market makers provide a valuable service for top penny stocks and other securities because they are willing to buy shares from a seller even if they do not have a buyer readily lined up. Hence, the brokerage firm is "making a market" for a particular stock or bond. A related question in all this is how does the market maker actually make money? Pretty simply, actually. As an example, the brokerage firm buys your shares for $100 each and then offers to sell them to a buyer for $100.05 -- a difference of only $.05 per share -- and stands to make a tidy profit when dealing with millions of shares each day.
Some Words of Caution
As any astute investor will tell you, the stock market is gradually improving and there are always opportunities to turn a profit if you know where to look and what to avoid. Solid penny stock advice that we encourage our customers to follow is:
Finally, never forget whose money is really on the line. Market makers are established firms with assets at their disposal the average investor can only dream about. The money you are investing is your own, so try not to be swayed by wild "what ifs" -- and instead settle on cold hard facts based on stock performance.
Everybody makes mistakes. It’s human nature, whether it’s in matters of personal relationships, business, or acting on penny stock advice that may significantly affect your financial well being. Investing is one of the most difficult things anyone can do, especially successfully, so in order to make money in the stock market you have to be open to good penny stock tips as they come along.
A key means of recognizing a good penny stock pick from a bad one is appreciating history, and learning from the mistakes of others. Too often, new investors hear of a bad investment that someone made and immediately say, “That’ll never happen to me because I’m too smart.” Well, no one who ignores lessons from history is smart, so pay attention and we’ll help steer you down the right path if you want to make money with penny stocks. Here are five lessons to pay attention to.
We’d be remiss if we didn’t tell you there are risks involved to investing in the stock market, but if you pay attention to historical trends and combine that with current data, you may be able to minimize risk. Ultimately, understanding history can lead to future profits.
Fraud happens, and takes on many different forms that can do everything from manifesting themselves as bad penny stock advice to directly impeding your ability to make money in the stock market. The law simply defines fraud as an intentional deception made for personal gain or with the goal of damaging someone, and you need to be careful so you don’t fall victim to erroneous stock advice that could result in financial ruin.
While finding good penny stock picks are the goal of any investor, that’s difficult to do when you’ve fallen victim to fraud. Here are the top 10 ways to protect yourself.
Investing in the stock market and building a winning strategy to make money is not easy. Thanks to the Internet and cable television, investors are continually bombarded by a slew of analysis mixed with obvious chafe. So the question becomes: Where do I start? Of course, the Internet is indeed a plethora of valuable knowledge and advice, but finding and digesting it may take more time and effort than most people can afford. Thankfully, we have put together a list of some common stock market terminology that applies not only to blue chip companies, but smaller ones whose shares are traded as penny stocks.
Note the following are listed in alphabetical order; not by order of importance.
Keep in mind this is not an all-inclusive list, and savvy investors will know to do more thorough research to better understand terminology and strategies that may affect their future earnings in the stock market.
According to some reports, less than half of adults in developed countries save money for retirement, which begs the question: Why? There are many factors, such as the cost of living, the size of the family, declining salaries and disappearing pensions, rising taxes, all of which keep people from trying to make money for the future. While investing is never easy, it is possible to make money with penny stocks or other securities if you follow good stock advice and common sense.
Many people today, especially couples with children, have no realistic concept of what it means to retire. Thanks to the global economic meltdown and fiascos with Enron, whose employees lost their entire retirement savings, and problems with domestic American car companies, whose workers’ retirement benefits were greatly slashed, workers in all walks of life assume they will never retire. But it can be done, with careful planning and determination, as we’ve outlined above. There are also some things to avoid when investing for retirement, among them:
Trying to make up for not investing earlier almost never works. Let’s face it, our time on this planet is pretty limited, and if you work for 40 years before trying to save for retirement – you may be disappointed with the results. Invest early, often, and sock away as much as you can comfortably afford.
Investing in the stock market and trying to make money is like a big shell game. You never know where you’re going to come across awesome penny stock picks that are too good to pass up, but the road to success is filled with rough patches to tread across carefully. We know you’re careful when you invest, but a good piece of stock advice to share is this: Learn to analyze industries for the stocks you’re interested in, before diving in head first.
To analyze industries, follow these simple steps:
Learning to analyze an industry can be technical in nature, and may take time, but in the long run the work will be worth the effort.