Most short-term trading relies solely on technical analysis of market action such as price fluctuations and trading volume. The single greatest challenge concerns locating the type of information required to make wise choices about which stocks to hold. While adopting a buy and hold strategy with some micro-cap or penny stocks can make sense and yield large rewards, there are also significant challenges to be faced.

Any shorter period of time doesnвЂ™t give a position enough time to develop sufficiently to off-set the increased risk associated with holding or the inconvenience of taking a portion of your investment capital out of play.Д¬hallenges of Adopting a Buy and Hold Strategy Generally speaking, however, experts agree that, if you are going to adopt a hold-posture at all, you should plan on sitting tight for at least six months. Some of the examples mentioned above took off fairly quickly and others rose in value steadily over a period of several years. There arenвЂ™t any hard and fast rules about the length of time that an investor should plan to hold any given stock. There are other opportunities of this kind in the market today, and if youвЂ™re relying exclusively on swing trading youвЂ™ll miss them. But they are not the only cases and they wonвЂ™t be the last. Obviously these kinds of cases are the exception rather than the rule. The responses came fast, and included examples like: Imclone (Nasdaq: IMCL), Nutrisystem (Nasdaq: NTRI), Mylan Labs (NYSE: MYL), Titanium Metals (NYSE: TIE), and plenty of others. not stocks trading under $1 due to a split) that had really taken off. The New York Times recently challenged its readers to identify bona fide penny stocks (i.e. But the high-yield penny stock is neither a myth nor an extinct creature. Others believe that if such a beast ever existed, it breathed its last with the end of the dotcom explosion. Some believe that the high-yield micro-cap stock is a myth- that itвЂ™s the El Dorado of modern times. However, there have been plenty of micro-cap stocks that really made good and rewarded investors with substantial returns over the long term. Of course most penny stocks donвЂ™t show much volatility or price fluctuation at all-and that is why profit-taking on small shifts in price is generally the order of the day where they are concerned.

ThereвЂ™s a very simple reason why savvy micro-cap investors are developing buy and hold strategies: the promise of very large returns on investment. Why a Selective Buy and Hold Strategy Makes Sense However, more and more players in the micro-cap world are recognizing that it can be a smart idea to supplement their swing trading with a more traditional buy and hold posture for a segment of their investment portfolio. Swing trading, then, is clearly an intelligent approach to most micro-cap investing. Swing trading suits the kind of technical analysis that works well with penny stocks it keeps investment funds fluid and available it allows for profit-taking on relatively small, short-term fluctuations in stock prices and it minimizes risk. There are plenty of good reasons for this strategy.

After all, most micro-cap traders are swing traders who donвЂ™t usually hold any stock for more than a couple of days. The thought of developing strategies for buying and holding micro-cap or penny stocks may seem strange.

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