Seen a share Pump and Dump?

Ever heard the phrase "pump and dump" and wondered what it is? Well, the next time you see a price spike on your watchlist, take a more sceptical picture of what's going on. As penny shares are often the target of fraudulent activity, it helps to recognise the patterns to avoid costly mistakes.

Simply put, the "pump" refers to hype created to artificially inflate the price of a share. The "dump" is when those who created the hype (and of course picked up a large quantity of shares beforehand) sell out. The result of the shares being sold or "dumped" on the market is a drastic price drop. Suppose you bought shares at the peak of this hype when the price spiked expecting them to go up. Within a day or two you could be reaching for another tissue, waving a tearful goodbuy to your investment with a huge drop in price that continues to go south for months to come. Whilst a sharp jump in price might appear a good indicator of things to come, remember to take a step back and decide if you're looking at just another pump and dump.

Here's a video by StockJock-e I enjoyed that sums things up and gives you the idea.

Reports and Price Spikes

Ever looked at a share chart and wondered how the reports coincide with spikes in price? Here’s a top tip to add to your sharedealing skillset.
Firstly, who did the report come from and was it paid for? On the surface it may look like its straight from the top, but dig a little deeper and find out if someone else has been paid to create a masterpiece for the masses. Check the disclaimer for a sum of money usually written in words (ie. two thousand, ten thousand, etc..) that was paid for it.
If it turns out to be paid for then all is not lost. Just look back over the last 12 months for reports from the same source and compare the effects on price. Is there is a spike following each report? Can you see a trend of price spikes driven by reports that’s consistent? If a report has just come out and price has spiked then perhaps it’s not the best time to buy after all. In fact, it could be the worst. If your already owned share is about due for a report and you’ve spotted this trend then pay attention when it’s released for good opportunities to sell.

Sitting On a Penny Share Goldmine

Solomon Gold (LON:SOLG) jumped in value last week following a news of "significant copper and gold results" from early samples at the Levisivisi prospect.

I got out early feeling smug only to watch them go up and up. Smug had well and truly left the building as I questioned my decision to sell in the harshest tone possible. What made me sell and why? Time for a recap.

I guess you've been there too. The self-discipline approach of fixing sights on a sum and making it should have been enough. Why couldn't I have been happy with that?

The answer was probably greed for a few different reasons, but mostly because I imagined what I could have made instead of what's really in the bank. Reality check, consider myself slapped.

I keep trying not to be influenced potential gains based on last years figures, but it aint easy. Knowing what to choose and when to buy is part of it. Knowing when to sell is the next. Most recently for me it meant fixing in my mind on a return of 40% and moving onto the next share. As I dwell on it I wonder if perhaps it's time to raise the bar and take into account my research and embrace a little more risk for much higher returns being dug up in the coming months.

Every few weeks I see a sharp jump on my watchlist revealing another mining company producing good results. Each time I see it, I just can't help myself, it's where I want my portfolio to be. Now before we all take a sharp intake of breath and start preaching the benefits of being spread across different sectors consider this angle:


Discussing with a friend the risks of being focused on the gold mining sector threw up some interesting points as to the potential gains. As currencies get devalued, where do people start investing? His answer was gold. The underlying belief being: as governments pump money into their own economies at the risk of devaluing currency, will the result be higher demand for gold and minerals, hence investment in our small cap mining companies?

As always you take your own risks, I start out looking for an undervalued share that's under 10p using some chart analysis, then check the news reports and financials.

If bad news has hit the share price and I believe the company has a future, it's on my shortlist for this months investments.

Buying Shares 20 FAQ

Found a nice video guide for anyone considering sharedealing or getting into penny shares. It's a really well put together piece offering answers to 20 common questions:

• What is an ordinary share?


• What is a preference share?


• How do I buy shares in a listed company?


• What are penny shares?


• Should I invest my money into penny shares?


• How do I decide which shares to buy?


• Are some companies less risky than others?


• When should I buy shares?


• When should I sell my shares?


• Should I follow tips?


• What is a broker?


• What is an advisory broker?


• What is an execution only broker?


• Are brokers regulated?


• Why would I use a broker?


• How do I choose a broker?


• Is the broker allowed to advise me on which shares to buy?


• What are the advantages of using a broker?


• How much are brokers fees?


• What do I do if I unhappy with my broker's services?

Well done to Chris Taylor and Videojug for putting together this simple & helpful FAQ.


Stock Markets: Buying Shares

Will TRP Penny Shares Stand Strong?

Following news of their first Ugandan well results turning up dry, Tower Resources Plc (LON:TRP) share price has dropped over 45%. Taking a look through Google Finance and related news they show a 13.37M Mkt Cap and plans for a second well in the pipeline. If share price is anything to go by, then confidence seems to be at an all time low. Questions going through my mind earlier today included:

• Will they strike second time lucky?


• Are they strong enough to survive if number 2 well turns up dry?


• Has the market over-reacted to the news?


• Is this as an undervalued share?

I hit the button and made my choice, hoped maybe it's of interest to you.

Click here to check out Tower Resources on Google Finance.

Article Source BestPennyShareGuide.com

Starting Out Finding Penny Shares

Wondering where to start? Here's a helpful vid by Jo showing a good source of info to get you started. I frequently use the same tool in the early stages of screening a share. Thanks Jo!



Visit Jo's blog here

A Penny Share depends on Where

This article from Howard Farmer sums up the seemingly simple question of what is a Penny Share. Knowing that "penny share" has a different interpretation to others around the globe is a handy little tip for us beginners.


Investing in Penny Stocks

What do we mean by Penny Stocks? Well it varies depending on country and stock exchange. So, in the U.S. financial markets, the term penny stock commonly refers to any stock trading outside one of the major exchanges (NYSE, NASDAQ, or AMEX). However, the official Securities & Exchange Commission definition of a penny stock is a low-priced, speculative security of a very small company, regardless of market capitalization or whether it trades on a securitized exchange.

Whereas in the UK markets, penny stocks, or penny shares as they are more commonly known, generally refer to stocks and shares in small cap companies, defined as being companies with a market capitalization of less than £100 million and/or a share price of less than £1.

In France, penny stocks generally refer to risky stocks with a price of less than 1 euro.

Big Gains / Big Losses

In the UK, for example, there are many shares on offer at say 5p - it only needs a small movement for potential gains. For example, a small oil stock may find a new exploratory field. News leads to 1p increase in share price - a 20% gain.

Of course, the contrary is true - some bad news can lead to a drop in price, and a fat loss is the result.

Rising Markets

In a rising market speculation in Penny Stocks can be very profitable as the downside is less risky. Using Stop-Loss with such stocks can protect those of a nervous disposition! Penny Shares are popular because of the potential gains. It is not quite stock market investing for dummies, but in a rising market you can make a quick buck.

There have been many examples of Penny Shares providing enormous gains. Pentlands - a penny share many years ago - became a major player in the sports footwear market eventually acquiring Reebok. Their rise was spectacular!

For more information on Investing in Penny Stocks << Click Here. BestFinanceLoan.com is your one-stop source for Finance: Mortgages, Loans, Insurance and Investment advice.

Article Source: http://EzineArticles.com/?expert=Howard_Farmer

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A important reminder that a good investor should always have a Stop Loss point set in a declining market. Did you check trend of your chosen market when buying shares?

Here's one i'm watching

There are several companies in the Oil and Gas sector producing interesting results recently. Here's one I added to my portfolio a month or so ago. Take a look for yourself and tell me what you think.

NTOG:LON (NOSTRA TERRA)

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

Your thoughts and feedback are always welcome.

Free Articles : Beginner's Guide to Online Share Dealing

Dealing shares over the web has never been simpler - or cheaper.

Execution-only brokers have driven down costs to as little as a fiver plus stamp duty and many have done away with the old percentage based way of calculating commission in favour of an easy-to-understand flat fee.

That said, there is still a bewildering array of alternatives offered by the High Street banks and the scores the bespoke internet dealers - and all of them vying for your business.
Despite plummeting fees and increased transparency, there are a number of potentially costly pitfalls awaiting the unsuspecting trader new to online investment. Below I show how to avoid them:

Choosing a broker should be easy and based on the best available deal. But you may wish to pay a little extra for a reliable service. By this I mean a website that doesn't crash or freeze as soon as you log in, and is simple and easy to use. As a rule of thumb, don't pay more than £12 per transaction. And look out for the hidden charges such as annual administration fees that push up the cost of the service.
A good piece of advice is to open accounts with two competing brokers and chose the most impressive. Among the hidden costs of trading is tax. Every time you trade you are liable to stamp duty, which is charged at 0.5pc. And if you are lucky enough to make a profit of more than £8,500 in any one year you will be liable for capital gains tax, which is charged on a sliding scale from 10pc-40pc.

Signing up is simple enough. Most sites have a wizard that will guide you through the process of opening an account in just ten minutes. Ironic then that you may have to wait a week before the service is fully functioning because the paperwork has to be mailed out, signed and returned with proof of identity. Most brokers require a utility bill and banks statements and one even asks for your national insurance number. So have these to hand. With some electronic brokers you may have to deposit cash - usually around £500 - and purchases will be funded from this. Others simply debit and credit your account.

Once you've signed up you will be issued with a password and username that gives you access to the trading screen. Log on to the active area of the website and your senses are immediately assaulted by all sorts of information.

First step is to decide which country's stocks you want to trade. It is fair to say most people will opt for UK. It is then a case of deciding which particular share you want to buy or sell. It would be straightforward to if you just entered the company name and hit the return key. But instead most sites will insist you provide the a two or three letter code - called an EPIC - that identifies that company. You'll find a search facility that allows you to look it up. Make sure you enter the correct EPIC, otherwise you'll end up buying shares in the wrong company. Believe me, I've done it and it costs me about 30 quid to sell back what I bought.

Once you have entered the unique company code, you will be presented with two prices for shares in the company. The lower of the two is the bid price - the amount per share the broker will pay for your stock. The higher figure is the offer price, or what you will pay to acquire shares. The difference between the two is called the spread and it is the profit the broker makes buying and selling shares. Again you must be careful to enter the correct number of shares - count the zeros. You don't want to be buying 60,000 shares at £1 each when you intended to sell 6,000 at 10p. Thankfully I haven't done this yet.

Some basic rules of investment. Always do your research. That means reading the financial pages and book marking sites such as Reuters, ADVFN and the BBC.
Relying a tip from a bloke down the pub will seriously damage your wealth.
Set a stop-loss. Very simply, if you buy shares you expect them to go up rather than down. If they start to head south then consider selling if the price falls between 15pc and 20pc. Reinvest your dividends. It's a no-cost way of growing your investment. Invest only in companies you understand.

Good luck and be careful out there.

Ian Lyall is the co-founder of the First Time Investor. which offers help and advices to people new to buying stocks and shares. The First Time Investor

Article Source: http://EzineArticles.com/?expert=Ian_Lyall

Welcome to the Penny Share Guide

Interested the highs and lows of my penny share fascination?

It began with a phonecall from a friend telling me about the shares in a mining company he had just bought. He asked if I was interested in building a portfolio as well and learn along the way. Knowing the way this guy's mind works, I jumped at the opportunity. He's a man of logic, a problem solver, and has no time for BS.

We agreed to enter into this venture with our eyes open, prepared for the worst scenario of loosing everything or even waiting years for a return. We could put it down to the "price of education" if all was lost. Secretly i'd been wanting that playboy lifestyle for some time now and had to know if share dealing was the key.

Being a fairly critical kind of person, I knew this was the beginning of the learning curve and my judgement sucked. As I asked more and more people around the office if they had shares, ready to pickup valuable info, it became obvious that those few who did have shares had lost a lot of money in the last year as the economy took a plunge. The knee-jerk reaction of most people being "don't do it" and "stay away from shares at the moment".

Well I ignored them.

Carefully I had been taking notes on what my friend had bought and the price. Over the next few days I picked up shares in the same three companies. Looking back, my lack of research or thought before jumping in was equivalent to using a carrier bag as a parachute. I did it anyway and in my defence, I took advice from a man who knew more than me.

I spent £450 in total and now had shares in 3 companies. The deed was done, I made my choice and was left wondering if I had made a huge mistake.

Little did I know this was going to be one of the most exciting learning curves to date. Within three weeks one share went to 3 times its value. In a state of disbelief, i grabbed the phone, ran out the office and made an over excited call to the broker. Cha-Ching!

It took a while to sink in, but it was true. I'd made my first profit.

Well, I can't take the credit for being the next share guru, after all i'd just followed along for the ride. It started me on the path of wanting to know: when to buy, what to get, and why?

Hours of online chat turned from games to global economics and comparing notes on shares to watch.

If you want, i'd like to show you some of the tools I use and share some of the lessons i've learnt so far. I'm only six months into this and currently own shares across 12 companies in a few different sectors.

If you'd like to share any useful info or links please do so in the comments here.
I'm looking forward to seeing where this leads.