Featured Penny Stock Basics

Penny Stocks: What To Know Before You Invest

Sign up for our FREE Newsletter and get:

  • The Beginner’s Handbook For Trading Penny Stocks
  • Penny Stock Alerts And Ideas
  • Learn To Trade Penny Stocks
  • Free Access to The Fastest Growing Highest Rated Trading Chatroom

What You Need to Know Before You Buy Penny Stocks.

Penny Stocks are volatile, meaning they can increase as well as decrease in value within a short period of time. Due to this volatility penny stocks are often the preferred investment or trade for those who are trying want to invest a small amount of money for the chance to cash in on large gains.

Beginner penny stock investors are always looking to buy low and sell and high. These small cap stocks can provide the best chance to accomplish the buy low sell high trading strategy all penny stock traders aspire to. Penny stocks offer potential greater percentage gains in a shorter period when compared to large cap stocks like Google, Twitter & Facebook.

While there is great potential for gains when trading penny stocks there is also great risk for massive loss. These small cap equities can move down just as quickly as they move up. Volatility, lack of current information, light trading volume, manipulation and shady stock promotion all play a role in the risk when trading OTC Stocks. For this reason, penny stocks are classified as a speculative and or a high-risk investment or trade and therefore should be treated with extreme caution.

Should I Buy Penny Stocks?

Investing and or trading in penny stocks is the ultimate stock market example of risk vs reward. These stocks usually have a lower market capitalization and are often called Micro Cap Stocks. As previously stated, one of the main reasons people are interested in penny stocks is the ability to invest a small amount of money and have it yield potential huge gains, for example a penny stock trading at $0.01 only needs to increase by a penny ($0.01) for the investor to gain 100% return on their investment. For a company like Google, Facebook or Twitter to do the same, the investor would need to wait for the stock to increase by much more than just one penny to see 100% return on investment. Just like the aforementioned example, if a penny stock moves down by a penny or even half of a penny, the losses are just as drastic.

The main goal with any investment or trade is to make money. The best way to ensure success in any trade or investment is to learn the skills and strategies associated with the type of investment and trading you are interested in.

By J. Samuel

As a trader and expert finance writer, I enjoy finding new and emerging trends that may have been overlooked by the average masses. If there's one thing that a trader or investor wants to know, it's how to use valuable data to their advantage. My expertise is in uncovering this data and compiling it into actionable information. As a professional finance writer, I've contributed to many of the top finance platforms and pride myself on researching factual, publicly available information and using that in all of my articles.

Leave a Reply

Your email address will not be published. Required fields are marked *