New York, NY -- (SBWIRE) -- 07/05/2012 -- Peter Leeds, the authority on penny stock picks, author of "Invest in Penny Stocks", and publisher of the Peter Leeds penny stocks newsletter, has announced that future Hot List penny stock picks will include stop-loss opinions.
According to Investopedia, a stop-loss is a sell which gets triggered (either automatically or manually) when a stock falls to a certain price. For example, if shares fall 15% from the price an investor buys them at, a stop-loss order 15% below the buy price would result in the shares being sold. The purpose of taking the automatic and small loss is to protect the stock market investor from more significant downside, in the event that the shares continued their slide.
"Given the recent weakness in the overall stock markets," mentions Leeds, "I felt it would be the perfect time to revisit our stop-loss education, and to also provide investors in penny stocks and our penny stock picks, with our opinions on potential methods for protecting their invested capital, if they decide on their own to approach trading penny stocks from that angle."
"Our Hot List penny stock picks all pass Leeds Analysis. That means that they are all high quality, fundamentally solid penny stocks companies. In our penny stock picks, we look for low debt loads, proven management teams, growing market share, and improving revenues, among other facets. Generally our penny stock picks are of such high caliber that even in the event of a significant price decline, they are still very healthy, and recover very strongly."
"However, the tremendous stock market weakness we are currently seeing is forcing penny stocks down to ridiculous valuations. Some of our Hot List penny stock picks, and those in our penny stocks to buy reports, are trading for less than their cash on hand value, while other penny stock picks are falling with the overall market, despite the incredible leaps they are making operationally."
Leeds mentions that it is always smart for investors, even in the best penny stocks, to have stop-loss triggers, which will preserve their capital from significant declines in the value of any underlying penny stock picks.
Leeds explains that none of his comments should be construed as investment advice, and that all trading decisions in penny stocks and penny stock picks should be up to the individuals, and they need to take full responsibility for every trading choice they make in their penny stock picks.
"Personally and in my own trading in penny stocks, I don't always apply stop-loss limits, but when I do, I usually set them for about 10% below my original purchase price. Stop-loss limits in penny stock picks may or may not be good for any individual trader, and each investor must come up with what percentage, if any, is best for them."
Leeds also mentions that penny stocks are very volatile, so there is the risk that traders applying stop-loss limits to the penny stocks they buy may result in them getting "stopped out," basically triggering their automated share sale, only to have the penny stock bounce right back up to higher levels.
"If you can limit your losses in the penny stocks and penny stock picks that decline in price, you will preserve more of your capital, while having the funds available to invest at lower prices if those penny stocks continue to slide."
Peter Leeds and his penny stocks analysis team profile a new Hot List penny stock pick each week, along with buy and sell price opinions, a full report on the company, and daily updates on past penny stock picks. To learn more about Peter Leeds and his world famous penny stocks pick newsletter, visit PeterLeeds.com.