Diversifying your investment portfolio is always a good idea. Diversifying your portfolio with commodities is an intelligent move. Commodity stocks become rage of the day today. Demand for precious metals, food and other basic necessities have increased enormously. New prosperous BRICS (Brazil, India, South Africa, Russia and China) is playing huge and important role in this increasing demand.
The beautiful thing about Commodity penny Stocks is that they are very simple in their nature.
For instance if you are talking about agriculture commodities that profits only when the price of land and foods reaches on a high level. Demand of food from India and China is just increasing on daily basis curtsy growing population in those countries. Not surprisingly food commodity stocks are on all time high.
Every coin has two sides.
Penny stocks has considered as wild stocks. Potential profit in these stocks is great. Because of dividends getting by these stocks they are called as dividend penny stocks. But Like any other stocks commodity stocks are very volatile in nature.
Some of the risks you’ll encounter when dealing with these stocks include incomplete and indirect financial reporting, limited liquidity and even complete fraud.
Another important thing in commodity penny stocks is technical chart patterns. Chart patterns. Though often confusing to the average trader, the patterns signal profits with regularity.
There are the types of technical Chat patterns: 1) Symmetrical Triangle. 2) Double-Top pattern. 3) Double-Bottom Pattern. 4) Ascending Triangle. 5) Descending Triangle. Knowing this technical chart patterns are very important factor in your success as an investor.
Though commodity penny stocks have enormous potential their unpredictability is something we should aware of. Fluctuations happen in penny stock market on daily basis.
If there is hunger in your belly and your risk prone then only opt for it. Always make sure that before investing in the penny stocks you will create a buffer investment. Experts suggest that always keep at least 3 months saving as a buffer money if in worst scenario you lost your investment in penny stocks.