What You Need to Know About Investing in Penny Stocks Right Now
Investing in penny stocks in 2021 can be challenging. Without the right tools and strategy, it can be very easy to lose money with penny stocks. However, by understanding how the market functions and how to trade, making money with penny stocks can be much simpler.
In October, there are a few factors that investors need to consider. This includes the pandemic, economic inflation, and geopolitical issues. All of these are working in tandem to provide higher volatility and high uncertainty about the future.
In addition to this, we have the effects of retail traders on penny stocks. This has resulted in massive gains among companies like Camber Energy Inc. (NYSE: CEI), Globalstar Inc. (NYSE: GSAT), and others. And because of this, some investors are looking for penny stocks that could be less volatile right now.
At the end of the day, it all depends on your individual investing strategy and what your portfolio goals are. By setting this up before buying penny stocks, you can be sure that the companies on your list, align with what you’re comfortable with. So, with all of this in mind, let’s take a look at how to invest in penny stocks in October 2021.
Investing in Penny Stocks in October 2021
- What Are Penny Stocks?
- How to Buy and Sell Penny Stocks
- Investing in Penny Stocks Right Now
What Are Penny Stocks?
By definition, a penny stock is any stock that is trading under $5 per share. These stocks can be listed on OTC markets, or popular exchanges such as the NASDAQ or NYSE. While many tend to associate penny stocks with the OTC exchange, there are hundreds to choose from that are listed elsewhere.
One thing to keep in mind is that penny stocks tend to be more volatile than blue chips. This is due to the nature of them being under $5, and the high volume that they see. Today, we saw shares of popular stocks like Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) and Pedevco Corp. (NYSE: PED), shoot up substantially with very high volume. These are great examples of how quickly, and how large penny stocks can move in a given trading day.
As stated earlier, when it comes to penny stocks, volume is an important metric to keep in mind. If volume is too low, liquidity could be non-existent. This could result in sizable price jumps with little to no notice.
On the other hand, if liquidity is high, there will likely be smaller increments in daily price movement which can help those who swing trade. So, understand what type of trader you are and how to use that as an advantage.
How to Buy and Sell Penny Stocks
On the surface, buying and selling penny stocks is as easy as finding a reputable broker that suits your investing style. While some brokerages offer commission-free trading, others charge small fees per trade. Weighing the benefits of the different brokerage accounts, will help to point you in the right direction. Beyond this, there are other aspects that investors need to know when it comes to buying and selling penny stocks. The first and most important step is to create a penny stocks watchlist. This is a step that many forget, however, it is crucial to making money with penny stocks.
If you’re making a watchlist, it is prudent to identify where there could be potential value in the stock market. This means identifying certain industries and how they could benefit from economic or political events. With penny stocks, we tend to see speculation play a major role in trading and intraday price movement. And as a result, understanding what makes penny stocks move will help you on your search.
After creating a watchlist, the next step is to research every individual stock on the list. It’s easy to go online and see what other traders are discussing, however, it is always best to discover the data yourself. This means looking at balance sheets, upcoming press releases, and any information you can find about a given stock. Considering all of this, buying and selling penny stocks can be much easier than previously imagined.
Investing in Penny Stocks Right Now
Investing in penny stocks in October 2021 can be challenging. But, if we break down all of the different factors at play, it can be much easier to see how you can benefit. The first and most pressing issue in the market is, of course, the pandemic. While the pandemic itself has lessened in severity, the side effects from it have not.
This means that we are seeing widespread inflation around the world, and geopolitical tensions. All of this has created a less than confident investing environment. And as a result, many investors have turned to companies that could be pandemic proof. This includes reopening penny stocks, mining penny stocks, and biotech penny stocks.
Moving outside of Covid, we have to consider the effects of retail traders. With more investors coming onto the scene in the past few years than in many decades prior, there are billions of dollars in the stock market that didn’t exist previously. This is a good thing, however, it is also one of the reasons for the major volatility we’re witnessing right now.
If we consider this, we see that it’s worth paying attention to places where investors discuss stocks such as Reddit and Twitter. These resources have become go-to spots for creating trending penny stocks, and it doesn’t look like anything is changing anytime soon. So to encapsulate all of this; consider what’s going on in the market and use that to your advantage.
Are Penny Stocks Worth it or Not?
Finding penny stocks to buy right now is not for the faint of heart. However, if you have the proper investing education and a strategy on hand, making money with penny stocks can be possible.
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But, it takes a dedication to finding out all of the information you can about specific stocks and industries to see where the most potential is. While this is not a comprehensive list on how to buy penny stocks, it should help to give you a starting point to work off of. Considering all of this, do you think that penny stocks are worth it or not?