3 Essentials for Investing in IPOs

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Initial Public Offerings are all the rage again. It is not surprising because when an IPO is hot the people that can get shares make free money.

An IPO is short for an initial public offering.  It is when a company initially offers shares of stocks to the public to invest.

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There haven’t been many IPO’s since the crash of 2008. The few that came out did not set the world on fire.

But it’s different now. In the US, Twitter went from $26 to $50 in minutes settling on the first day 70% up and The Royal Mail IPO was priced at 330p, closed on day one at 455p and hit a high of 595p less than 3 weeks later a profit of 70%.

70% is a massive return, but you need to do to pick the right one.

1) Read the media and the latest RNS feeds.

If the IPO has a buzz then it is a good sign there will be lots of uplift in the opening price.  It does not really matter if some of the media is negative you should expect that. Consider the negative press on Twitter and The Royal Mail. Now of course the joke is on them. The latest RNS feeds will give you the access to the upcoming news, with  ADVFN providing real time news feeds, handing you the advantage in the IPO market. The bottom line is it’s the volume of coverage that will make the market roar.

2) Decide before-hand why you are buying and get the right tools to help you track your decision and the opening.

ADVFN will cover the IPO the second it goes live on the market. You can watch it trade in real time for free. The bulletin boards will be alight with debate and controversy weeks before the big day and you can track the broad market leading up to the launch day.

If you want to sell straight away, then do that. If you are buying for the long term, that’s fine. The key is to go into the IPO with your exit plan clear in your mind. Win or lose it will make the trade easier on your nerves. Then using internet tools like ADVFN you can fine tune your strategy on the day.

3) Lastly, you need a financial intermediary that can get you the shares. It is hard to get shares in an IPO the day before it kicks off.

AllIPO is a specialised service that registers you just for IPOs, unlike other brokers that want you to trade with them as well as buy IPOs.  AllIPO enables you to use the platform just for offers like Royal Mail that you can even do it at the last minute.

However should you choose to do it, you can’t get an IPO without a broker and the money on hand. So do a little preparation and have the right online tools before you start.

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