| By :
Grant Dougan
If you're interested in learning how to make money by investing, in today's article we look at a technique that is often overlooked when people invest in stocks. The mention of penny stocks often send shivers up people's spines as they believe these are simply risky stocks that are sure to lose them money. However, if done correctly, you can make some tidy returns by investing in these types of stocks. As you probably know, penny stocks are shares that have a very low value. Although people will have varying definitions, for the most part a penny stock is anything that is trading under a dollar. For the most part, these are companies that are rather new and unestablished. They are hoping to build their company and break-through in the industry in which they operate. What's nice about investing in these shares is that you find the right company that is able to grow their business and gain success, than you can make some great money. Although every trade is different, there are times that you will multiply your money several times over. So what's the key to making money? As you can imagine, different people use different strategies but I'll share with you what I look for. When looking at a company I use what is called "fundamental analysis", which means I review its financial statements, its management, its competitive advantages along with their competitors. I always want to see a company that is in an industry that is growing. Otherwise they have little chance of succeeding since they are new and by the time they are ready to truly compete, the industry may be dead. Second, I like to see some aspect of their business that makes them unique. If they differentiate themselves from the competition then they drastically increase their chances of success. I also want to see a business that is already generating revenue or has contracts in place that guarantee them some revenue. These businesses will typically be losing money on a yearly basis as they are in the beginning stages, but I do want to see that revenue exists. Other people have different ways of deciding where to invest. Many people have made terrific money by using technical analysis where they will study price and volume charts in order to determine the best times to buy or sell. Give it a try and see what works for you. Just remember that penny stocks aren't anything to be scared of as they can end up making you some phenomenal money!
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