Do you invest in penny stocks ? Penny stock is a strock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges.
These types of stocks are generally considered to be highly speculative and high risk because of their lack of liquidity, large bid-ask spreads, small capitalization and limited following and disclosure (Investopedia)
When you search around for the info regarding penny stocks over the Internet; there is every possibility that you might get your hands over wrong info. The reason is that everyone has his or her own opinion and tactics regarding penny stocks so you might get different info from different sources that can easily get you confused when you sit down and sum up all the collected info together.
You can find several forums and message boards where millions of people are busy providing penny stock tips and other associative info and guidelines as well. However, the problem with tips and info gathered from such sources is that mostly. all these tips, strategies and techniques are nothing but a big hype. You would not even get to know that posts are being generated by hired PR guys who are there in order to create frenzy so that a PPS stock that is too low on rates can climb sky high within no time at all.
When talking about penny stocks trading, speculation and rumors are something that matter a lot .10 can go up to .40 in just 24 hours. These figures might not sound like a big deal but let’s say you had a thousand dollars that you can use to buy such kind of a stock and if same scenario takes places then you can end up gathering 3 to 4 thousand dollars within 24 hours with ease. Although this is not what penny stocks are about but such situations do occur quite commonly.
The investors or traders sitting on the top would generally put in loads of time in stock chart analyzing that helps in understanding the trends, movement and making predictions. This method can work a lot better then going with the info provided by the company or other sources over the internet or any other source as well. If you are a new investor who is thinking about going for penny stocks then keep a few more things in mind:
The money that you cannot afford to give up should not be used for investing into penny stocks. Plus, you cannot do traditional trading with penny stocks, these are more of a gambler’s choice. Although you can be quite successful in penny stocks if you play like a gambler but remember to make sure that the potential loss needs to be kept to limited all the times in order to remain on the safe side as much as possible.