Obviously everyone want to buy into a rising penny stock but there has to be a limit.

The problem with buying into a penny stock that has risen more that 100% in a one week period is that many investors will be sitting on profits of up to 100%. At this point those investors can sell and walk away with big gains.

If you buy into the stock at this point you run the risk that those investors will cash in and sell their shares and the price will drop significantly often back to the the price they bought at. You should therefore restrict yourself to buying stocks that have moved less than 50% in a one week period.

Most penny stock investors will wait for a 100% gain before considering profit taking even if the fundamentals point to even higher gains. Even if there are some sellers at this level, pegging the price back, your risk is smaller and the price will likely continue to rise as investors again see the stock as a bargain.

Todd B

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