Are you looking forward for some investment option? Then, do not think furthermore, since this article wil provide you one of the best investment approaches. Yes, I am talking about investing in micro cap stocks. A micro cap stock is a stock share in a company that is capitalized as micro with regards to the entire stock value. Such companies basically owe limited assets and have a tendency to be priced very low as compared to other same kind of stocks.
As with any other investment alternative, this Big Cap Stocks, too have some risks associated with it. Then, you might now think that what makes one to invest in such type of stocks? To know the answer, you need to read further.
All the finance industries have and operate on a simple principle. The higher returns that one makes on its investments are directly proportional to the risk involved in it. In simple words, if you want to earn higher, you need to face higher risks. Just go through a simple example provided below.
You wish to invest ten thousand dollars, but you have 2 options in your mind. The first option is to go for a safe government bond that provides you five percent returns on the sum you invest. This is guaranteed. On the other hand, second option you are thinking about is about a company that also provides give percent returns on the sum you invest, but this is only when the company makes a profit. So, which option would you prefer to opt? Obviously, the first one, if you are a smart investor. The first option does not endow any risk and at the same time gives you similar returns on your investment; whereas the second option depends on the gains made by the company.
This example now must have cleared that why micro cap funds are a popular investment approach that offers returns to fifteen percent maximum. Micro cap stock picks are defined in various ways. However, it also depends on the rates of each share. Prior to purchasing big cap stocks, it is suggested to:
1.Evaluate the former resistance levels and then makes plans to decrease or exit from your position
2.Keep an eye on news releases and identify technical analysis bullish patterns.
3.Verify the shorts percentage in the stock you like to. The higher it is, more better it is.
john william is freelance shares trading and Stock Market News writer and is writing review articles on Big Cap Stocks, Micro Cap Stock Picks, Todays Stock Market, Small Caps Stocks, World Stock Market News, Stock Market Tips. For more details on the Micro Cap Funds you can visit otcshub.com.