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Penny Stocks Daily Performance

Use Penny Stocks to Capitalize on moves in the Price of Oil, Gold, Curencies and More

During the recent explosion in Oil prices, which may or may not be over, blue chip stocks that were affected positively were essentially canceled out by the stocks disrupted in a negative way.  There are tons of ways in which traders and investors exploit changes in the perception of supply and demand in energy, commodity and currency prices.  With respect to Oil, traders may simply buy the futures contact itself, light sweet New York Crude for any number of months out.  Or they may play the Gasoline, heating Oil or natural gas markets.  Often, investors will buy or sell shares of an ETF, or Exchange Traded Fund that is heavily weighted in the Oil, or Gold sector to prevent the risk of investing in only a few exploration, mining or manufacturing companies.  They may also further attempt to enhance their profits by using their investment in Jet Fuel to borrow shares of an Airline, to use an obvious example, and selling them short at the same time.  Sure, you can open up a new futures account, or buy Exxon Mobil on margin, but in the main stream world of investing, it will take a very large amount of capital and a good deal of time and risk to capitalize on a Ten Dollar move in a barrel of Oil or a Twenty Five Dollar move in the Price of Gold.  This is where Penny Stocks come in.

Don’t get us wrong, playing with Penny Stock Oil and Gold exploration companies is far more risky than buying ETF’s or other blue chip type plays.  It is perhaps the risk/reward relationship, however, that is most enticing.  Penny Stocks allow you to use a lot less of your portfolio to attempt to capitalize on moves in Oil, Gold, foreign exchange, and other instruments, with the potential for far greater percentage gains.  This, believe it or not, lowers the risk, as only a tiny percentage of ones portfolio is at risk, and if we consider the volatile nature of these types of markets, will likely cause a lot less headaches.  We have to very careful with Micro Cap companies that are engaged in the exploration of Oil and Gold, however, as they tend to be a different breed of entities.   They often have a very large amount of shares outstanding, are buried in debt, and who knows if they will ever actually find black gold.  Weeding through the ever growing list of Energy and Commodities companies whose stock is priced below a buck to find potential movers can be time consuming, but not if you know what to look for.

Penny Stocks allow you to use a lot less of your portfolio to attempt to capitalize on moves in Oil, Gold, foreign exchange, and other instruments, with the potential for far greater percentage gains.  This, believe it or not, lowers the risk, as only a tiny percentage of ones portfolio is at risk, and if we consider the volatile nature of these types of markets, will likely cause a lot less headaches.  We have to very careful with Micro Cap companies that are engaged in the exploration of Oil and Gold, however, as they tend to be a different breed of entities.  They often have a very large amount of shares outstanding, are buried in debt, and who knows if they will ever actually find black gold.  Weeding through the ever growing list of Energy and Commodities companies whose stock is priced below a buck to find potential movers can be time consuming, but not if you know what to look for.

Don’t get us wrong, playing with Penny Stock Oil and Gold exploration companies is far more risky than buying ETF’s or other blue chip type plays.  It is perhaps the risk/reward relationship, however, that is most enticing.