Penny stocks are the street name for microcap stocks, stocks that trade at a value of below $5.00 a share. New companies or companies facing liquidity, debt, or profitability challenges generally offer penny stocks. These stocks are generally not traded on the major trading exchanges, but rather are traded “over the counter”. Due to the high volume of stocks sold and the limited filing, listing, and regulatory standards these stocks are subjected to, the penny stock market is more volatile and riskier than the more traditional blue chip market. Investors who are interested in a high risk/high reward scenario may be a good fit for the penny stock market. These investors generally have a good handle on market trends and are familiar with the ins and outs of high volume trading. Since penny stocks are not listed as part of the major exchanges, penny stock investors need to look elsewhere to find available stocks and the research they need to make sound decisions. Penny stocks are inherently speculative. It is often impossible to calculate the actual net worth of most penny stocks. If you are investing a new company, that company may not have a product stream, inventories or revenue. You are essentially investing in the company’s potential and future growth. Conventional financing logic may not be an accurate gauge of a penny stock’s real value. Investing in penny stocks is highly speculative. In fact, many penny stocks find their shares soar based on investor speculation. Penny stocks are highly volatile and prone to drastic price swings. Savvy investors know how to make the swings work for them It is difficult to find credible information about penny stocks. They are not held to the same standards of conventional stock reporting and filing. There are a number of websites that can help you find the information you need. These websites provide a listing of “hot penny stocks” and may have some back up research available. These websites also allow you to chat with other investors and view their portfolios and trading success rates. You will have an opportunity to learn with and from seasoned penny stock investors. Investing in penny stocks are not for everyone. Penny stock investors have a high tolerance for risk and an ability to manage the stocks innate volatility. If you have done your research and explored all your options, then you can make a firm and confident decision about the penny stock market. Remember, diversification is as important, if not more important, with penny stocks than with traditional stocks. Since the penny stock investor is buying in volume, they need to explore a number of different industries, areas, and companies. Investing in penny stock is not a long-term investment strategy. In fact, most penny stock investors are looking to get in, get out, and make as much money as possible in a short amount of time. If you are looking for a way to capitalize on a small investment, penny stocks may be for you. Are you looking for more information regarding penny stock investors? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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