We have been told hundreds of times that stock prices move by corporate earnings, customers, acquisitions, or contract wins. It is true that those things affect the price, yet, there are other factors that can also drive the price of penny stocks company.
These factors are usually ignored, overlooked, or just misunderstood. These factors are not the main driver of the penny stock prices, but they will help you move to the next level.
Imbalance Technical Trading
Imbalance technical trading happens when there is too much buying than selling or vice versa. The performance of underlying companies usually do not affect the imbalance trading, but the investors’ chance or timing does.
Especially with penny stocks that have a lower price, the possibility of it to happen becomes bigger.
There is much temporary imbalance, since the sharp investor may find the sudden selling activity early, and get a small position in an undervalued price. It is difficult to avoid this imbalance, but it is possible when you continually watch the stock trades.
The Hype from Media
Media loves great stories that attract thousands of people. When news continuously gets more viewers coming back, they always double the coverage on those topics.
Consequently, we have seen many investors come to marijuana penny stocks and digital currencies in recent years. Less experienced investors will follow these trending stories, hoping to get huge profits.
Once the stories spread all over the media, usually the opportunity for investors has gone.
Industry or Sector Expansion
Owning shares in a growing company is good, yet it will be better to own shares when the entire sector or industry group is expanding. If business brings 2 percent of market share for a particular business concept, then the market follows to double in size.
When an industry is growing, the underlying company can also look like they are expanding and growing regardless of their performance in the competition.
