At the same time, there are literally hundreds of thousands of individuals who buy and sell corporate securities on one of the regulated stock exchanges or the NASDAQ regularly and are successful. A profitable outcome is not the result of luck, but the application of a few simple principles derived from the experiences of millions of investors over countless stock market cycles.
Since the underlying businesses operate in differing markets, sectors and countries, their quoted prices move independently as supply and demand in them rises and falls and new information is released to the public about the current business situation. It is the changing of prices that offer investors the opportunity to make a capital gain (or loss) via ownership.
Beware of confirmation bias: With penny stocks, beware of confirmation bias: the tendency to interpret information in a way that that conforms to your preexisting beliefs. This is something that afflicts nearly every human being and most new investors (or rookie poker players). Seeing what you want to see (albeit usually subconsciously) can be incredibly costly.
In the professional world, one of the key concepts is diversification. Harry Markowitz is a Nobel prize winning economist and one of his major discoveries was that adding new asset classes can dramatically alter the overall risk profile of a portfolio. His finding was that a portfolio that contained very low risk assets would normally benefit from lower volatility and higher returns if a higher risk asset was added. This is due to the likely lack of correlation between high and low risk asset classes.
C (Fair) - In the trade-off between performance and risk, the stock has a track record which is about average. It is neither significantly better nor significantly worse than most other stocks. With some funds in this category, the total return may be better than average, but this can be misleading since the higher return was achieved with higher than average risk. With other funds, the risk may be lower than average, but the returns are also lower. In short, based on recent history, there is no particular advantage to investing in this fund.
There are plenty of interesting and simple online tools which can be used to improve your trading results, such as the Relative Strength Index (RSI). This is just one example from among dozens of possible technical analysis (TA) options, and you will need to discover and decide which ones work best for you. You may need to paper trade to figure out the best TA tools for you and your strategy. Besides these sorts of technical analysis indicators, there are a few "tried and true" rules:
Network effects -- In simple terms, a network effect occurs as more people use a service or product, and the product or service itself becomes more valuable and desirable as a result. Think of companies like Facebook (NASDAQ:FB). As more and more people join Facebook, it becomes more difficult for people not to use the platform in their daily lives.