Don't get greedy. If you buy them you have to have the discipline to sell them either when they hit a predetermined gain or loss. The toughest is selling the loser because you still hope it's gonna go up. Many people sell a portion when they lock in a profit and then the remaining shares they own may be considered "free". Usually your lucky if 25% of the small stocks you buy make you money. So controlling your loss is vitally important. Timing is everything you may buy a great concept penny stock at the wrong time, and suffer a loss. I revisit my losers from time to time just to see if a new buying opportunity may be available. Oh, and perhaps the most important...only trade what you can lose. In my case my trading portfolio is less than 5% of my overall portfolio. When my trading portfolio hits a predetermined value, I transfer money OUT of it.
i follow that philosophy with most stocks but if certain small/micro cap stocks meet certain criteria i buy a big position when cheap and hold them and add on the dips, the criteria are: 1. founder holds at least 20% of shares 2. company is just moving from startup to profitability or if not profitable is growing top line. 3. management clearly sets out road map for the company and growth targets. capable of organic growth but not afraid of acquisitions. 5. low float, < 40million shares 6. gets a large part of business thru reorders 7. has competitive product and/or geographic edge that is sustainable 8. great cfo and other management team 9. BUYOUT POTENTIAL - by itself reason to hold 10. at least 50% revenue growth 11. 50/50 chance that the company's products/services will realize great sales once the market develops or the product comes to market, as with biotechs, other development companies. wwat fits that description.
so you buy big in a number of those companies and only a few have to hit.
had great luck with VDSI, PRFT, JSDA, RSA, CKCM , etc and if i had sold at 100% gain would have left huge $$$ on the table. WWAT doesn't fit many of those criteria but when it hit .16 i loaded the boat, part hunch, part DD and believing the management team joining wwat were too bright and talented to jump on board a sinking ship.