We have all heard about the importance of research in the decision to invest in certain new penny stocks. Traders and investors are always advised to use the necessary tools, techniques and technologies to separate the good microcap shares from their bad counterparts. Thus, fundamental and technical analyses are applied on the penny stocks using reliable, relevant and updated information.

But that’s where issues arise with information. Most microcap companies listed on the Pink Sheets and OTC Bulletin Board offer little, if any, information about their organizations beyond what is required of them by these electronic quotation systems. In fact, the listed companies are not even obligated to divulge information that the management is unwilling or unable to provide, which is in stark contrast with the strict regulatory requirements of the national stock exchanges.

And so, research can often result in dead-ends. Lest you start to drop penny stocks from potential inclusion in your investment portfolio, here are four secrets that you can apply in finding the best microcap shares.

Look at the Trading Volume

Obviously, the higher the trading volume for the microcap stocks, the higher the potential for profits. You must then find the penny stocks with the potential for a big surge in volume before the herd of other investors and traders even know of it. This way, you can purchase the stocks at their lowest prices and then sell them later when these shares have risen in market value resulting in maximum profits.

So, how will you know which of these stocks will experience a surge in volume? You may ask your online stockbroker for a mathematical program related to it.

Hire the Right Broker

One of the largest expenses in trading with new penny stocks of any kind is the broker’s commissions. With every trade successfully carried out, your broker will automatically deduct his commissions from your account. This is true whether the trade meant a profit or a loss to you simply because a service has been provided and that service must be paid, either through a flat rate or a percentage depending on the agreement.

Now, if you hired the broker that cannot be reached just when it is the right time to sell the penny stocks for a profit, then you have just lost an income opportunity. But if the broker is up to the task, then you have higher chances for making more money with penny stocks.

Also, your stock broker can provide the necessary tools and technologies, maybe even offer useful tips if you have developed a good working relationship, to make your decisions more profitable. After all, your broker will also benefit with each successful trade you make through him.

Keep Track Of Whats Hot

Yes, hype can be dangerous if and when you believe it without doing your own validation steps. But you must look at hype in another way since it can be a valuable tool in finding the best penny stocks.

Keep in mind that many of the microcap companies are still making a name for themselves in the industry. To further establish their reputations, the management will often hire publicists to spread the word about the company – to put it bluntly, hype. When you can verify the claims as being true, then you can look further into the desirability of the new penny stocks.