Many people believe in scouring through penny stocks in hope of finding the next Google or Microsoft...
But this is unlikely to ever pay off Although there are many companies that have allot of potentialtrading penny stocks it is a common misconception that all the Large companies like Microsoft and Google started Started out as penny stocks.
Most of these companies started out trading at the $25-$30 mark.
What are Penny Stocks? The definition of a penny stock varies According to the Securities & Exchange Commission (SEC) any stock under $5 is a penny stock others set the cut-off point at $3, while some consider only stocks trading at less than $1 are penny stocks or the any stock trading on the Pink Sheets or OTCBB to be a penny stock.
What are the Risks Penny stocks are incredible risky to trade in, although just a small increase of a few cents can potentially triple your investment, a few cents in the opposite direction could just as well cripple you financially.
That's why its important to know your risk tolerance before you invest, just take a look at some of the risks when trading in penny stocks The Lack of Information Revealed to the Public Because companies on the Pink Sheets don't have to register with the Securities & Exchange Commission (SEC) enough company history is not always available to the public as is needed to make an informed decision when purchasing stock unlike on the NYSE and the NASDAQ exchanges.
To make a correct decision enough reputable information needs to be available to the trader as possible.
Lack of Trading History Not knowing the trading history only multiplies the difficulties to picking the correct stock.
Lack of Liquidity Liquidity is the The degree to which anasset.
or security can be bought or sold in the market without affecting the asset's price.
Penny stocks are known for there erratic movements these can either make or break an investment.
Biased recommendations Some companies will pay for people to make fake recommendations, Look to see if the author of the recommendation is being paid for making this recommendation as this is a giveaway of a bad pick and make sure that any press releases aren't authored by people looking solely to influence the price of a stock.
These are just some of the potential risks investors face when looking for profitable penny stocks.
But of course with all these risks come great benefits too.
A well chosen and painfully analyzed stock can increase dramatically within minutes of the market opening taking you with it.
There are also allot of new companies who have just started trading as penny stocks, some of these companies are working extremely hard to make their way up to the more reputable NASDAQ and NYSE and buying in these stocks can make you very nice profit as long as you make sure your covered for all possible eventuality and you have got all the information you can about the stock.
But this is unlikely to ever pay off Although there are many companies that have allot of potentialtrading penny stocks it is a common misconception that all the Large companies like Microsoft and Google started Started out as penny stocks.
Most of these companies started out trading at the $25-$30 mark.
What are Penny Stocks? The definition of a penny stock varies According to the Securities & Exchange Commission (SEC) any stock under $5 is a penny stock others set the cut-off point at $3, while some consider only stocks trading at less than $1 are penny stocks or the any stock trading on the Pink Sheets or OTCBB to be a penny stock.
What are the Risks Penny stocks are incredible risky to trade in, although just a small increase of a few cents can potentially triple your investment, a few cents in the opposite direction could just as well cripple you financially.
That's why its important to know your risk tolerance before you invest, just take a look at some of the risks when trading in penny stocks The Lack of Information Revealed to the Public Because companies on the Pink Sheets don't have to register with the Securities & Exchange Commission (SEC) enough company history is not always available to the public as is needed to make an informed decision when purchasing stock unlike on the NYSE and the NASDAQ exchanges.
To make a correct decision enough reputable information needs to be available to the trader as possible.
Lack of Trading History Not knowing the trading history only multiplies the difficulties to picking the correct stock.
Lack of Liquidity Liquidity is the The degree to which anasset.
or security can be bought or sold in the market without affecting the asset's price.
Penny stocks are known for there erratic movements these can either make or break an investment.
Biased recommendations Some companies will pay for people to make fake recommendations, Look to see if the author of the recommendation is being paid for making this recommendation as this is a giveaway of a bad pick and make sure that any press releases aren't authored by people looking solely to influence the price of a stock.
These are just some of the potential risks investors face when looking for profitable penny stocks.
But of course with all these risks come great benefits too.
A well chosen and painfully analyzed stock can increase dramatically within minutes of the market opening taking you with it.
There are also allot of new companies who have just started trading as penny stocks, some of these companies are working extremely hard to make their way up to the more reputable NASDAQ and NYSE and buying in these stocks can make you very nice profit as long as you make sure your covered for all possible eventuality and you have got all the information you can about the stock.
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