All about Penny Stocks

Penny stocks are very low-cost stocks that one can buy and also sell for more than one dollar for every share. This indicates that they are only sold and bought in large quantities. If you are new in this, this article will help you a lot. Read it carefully and know everything you could have wanted to know about penny stocks.

Bargain prices

Some companies that are just beginning may take a lot of time to reach the high share prices. One of the most interesting things about this is that as an investor with limited capital, you will be able to buy huge volumes of shares with low price.

Where to purchase penny stocks

They are normally traded on over the counter markets. Such markets are less regulated and less formal as well. Some of them are also found on the regular exchanges.

Regulation

Companies listing them are normally subjected to various regulations as well as financial reporting rules. If there are companies that need to be listed on the OTCBB, then they must make sure that they should ensure their securities are quoted.

Advantages

Future winners

With enough research, the chances are high that you will be able to come across a number of companies that are trading in this penny section. These companies tend to love in shadows, and apart from that, they have what it takes to be the future winners. This involves the skilled employees, the continuously increasing markets, financial positions as well as the innovative ideas that are meant to create disruptive services as well as products that can help shake the big companies in the industry.

Expand the small investments

You may be a fresh graduate and may have just gotten a job. Your stress would be how you can clear your student loan, and that is when the thought of investing in stocks can come in your mind. And by investing in the penny, you may be able to get a lot of return to repay your student loan. With $500, you will be able to purchase several shares, but if you choose to go to a bigger company, you will only get four shares.

Their per-share price is extremely low; therefore, you don’t need to have large capital so that you can begin the investment.

It is very easy to buy the stocks, and this is because they are very common and they are also easily available for people to buy. Since the stocks are offered at low prices, investors can easily buy several stocks. With this, the options of the investors are also expanded; they can, therefore, invest in as many stocks as they want at a time. If you can wisely manage your stocks, you will be able to generate as many profits as possible.

These stocks also move up at faster intervals if you are looking for a way to make money on a short time, you will be able to make your dream to come true with this.

These stocks are cheap; this means that as an investor, you have the opportunity to purchase huge holdings with the little money you have.

With penny stocks, you can get rich quickly.

Disadvantages

Scam

Because it is low priced, one can easily use it to scam you. Scanners find it an easy tool to make you fish out your money. Many are the times when the promoter will make a lot of money, while the buyer always turns out to be the loser.

Thin traded

Compared to bigger companies which tend to sell millions of shares every day, these stocks are thinly traded. Some may see up to a thousand shares every day while the other people may also see less than that.

Risky

They can be easily predicted, and you can easily predict where their prices will move in the next financial year. In addition to that, they are also stagnant and can only increase if they know that the company is going to make great breakthroughs.

They cannot be easily liquidated

If you may want to get out of it and think of selling it, you may find it difficult to get a suitable person that can purchase the stocks from you. Selling large quantities may also be a problem during the normal business days.

You can easily lose the investment

This can happen, especially if the company that has issued the stock is near to bankruptcy, and this means that the chances that you will lose your investment are greatly increased. And if the stocks are also issued by new companies, you may also lose the money, which is if your prices fail to go up.

You can also lose the stocks

This is very possible because these stocks are usually traded by amateurs that are new in the stock trading business. This is because they are new in the trading business. These stocks don’t arise naturally; there are some times they rise in prices while sometimes they remain constant.

As a small-time investor, you may find the stock market very frustrating, and you even end up being jealous of the larger investors.

With all the information provided above, you are now aware of things you would have wanted to know about these stocks. Investing in penny stocks should be basically your personal decision; this is because it has its advantages and disadvantages. These stocks can come with a lot of pros and cons; this means that getting yourself into this trade requires a lot of hard work as well. But again, this business is not for everyone, for some people, it will really do them good, but for some people, it won’t work for them.

For naive traders, this is one thing they should never involve themselves with; they have to be very cautious when thinking of getting involved with these stocks. You should, therefore, be aware of investing in these stocks, and apart from that, you should also acquaint yourself with its benefits if it is done in the right way.

tracy collins

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One thought on “All about Penny Stocks
  1. Leandra Pisano

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