What You Need To Know About Penny Stocks

Wall Street New York Stock Exchange
  • What You Need To Know About Penny Stocks

These are stocks that trade for less than $5 in the exchange. They are often offered by smaller companies. Since they are traded in the smaller markets, penny stocks are not subject to the same standards are the rest of cap stocks.

If it’s your first time investing in the stock exchange, you can always start with penny stocks to learn the tricks of the game before moving up to the larger stocks. Keep in mind that without the best advice, you’re likely going to make costly mistakes. Therefore, starting off with penny stocks can work as training wheels before dipping your toes in any other types of stocks.

The basic piece of advice you will find when you’re starting out in stock exchange is that you should hold your stocks for a specific period after buying low to make a profit when they sell high. During these fluctuations, penny stocks are always the best place to start. They can be bought and traded daily for the best results.

Why Should You Choose Penny Stocks?

Here are a few reasons why should choose penny stocks immediately.

  • They sell for a considerably lower price than the other types of stocks. Therefore, you can always participate in the stock exchange without spending too much money.
  • If you’re looking to make quick profit, you can buy these stocks in large numbers and sell quickly. Make sure to have stock alerts set up to keep track.
  • If you take a look at the stock exchange market, you will find that there are many penny stocks you can trade in. Therefore, there are a lot of investment opportunities for you.
  • Purchasing and trading penny stocks can fairly easy and effortless.

Are There Any Disadvantages Of Penny Stocks?

  • Due to market volatility, the value of a stock can change causing prices to fluctuate rapidly. It’s tough to predict some of these changes.
  • Using marketing tactics it’s easy enough pump or destroy a stock which is a lot harder to do in a larger market with different types of stocks.
  • Trading in penny stocks often presents a higher risk because there’s little to no information about the companies selling these stocks.

Tips For Investing In Penny Stocks

  • Start by doing your research. Make sure to find out all the relevant information about any stocks and the company before investing. Note that, these companies are generally small and there’s very little information available. Therefore, you can always visit the company’s website to find out more about them before making your purchase.
  • Anything that you can find on these penny stocks can prove helpful. Also, if you know anyone else trading in the same, you can always ask for tips on how to commence in the exchange too. Always start small and grow your number as you move up. They are perfect if you’re looking for a quick profit but don’t put all your eggs in one basket.
  • Keep in mind that although these stocks are considerably cheaper than the other types of stocks, it’s not a good idea to buy them blind. Yes, regardless of the fact that you will make very few losses when your stocks sell lower than you actually bought, you need to do your research. Any loss, no matter how little will also affect your finances.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]; Tel: +2347065163489.

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