What are penny stocks? Penny stocks are stock that are generally priced under $5 a share. They can be extremely volatile and risky and move according to speculation rather than solid company financials. The price can range from several cents to several dollars. Their characteristics are risky, volatile, high trade potential, and the obvious. the very low price.
Why Invest in Penny Stocks? Why are they so attractive?Why invest in penny stocks? Because of this one reason: you have more margins for profit! The attractive characteristic of penny stocks is that as a stock trader, you can buy hundreds of penny stock shares for a small amount and make huge profits when speculation goes up. Even though solid evidence on penny stocks are hard to find, speculation new is not! If you follow stock forums that offer penny stock pages, you can follow the market speculations and see which ones to turn a profit on. Open an online traders account at Scottrade, etc and gain some experience trading these penny stocks.
Good Strategy for Investing in Penny StocksBefore you invest in penny stocks you must be forewarned: they are pennies for a reason. They are high risk investments and you must understand that. However, with the high risk comes extremely high profits. The best (and risky) strategy for investing in penny stocks is to follow the news. Since most penny stocks are purely speculative, a basic strategy is to follow newsletters that work. You can subscribe to several newsletters offering their picks on penny stocks, and you will see which ones give results and which ones dont. Follow up on some of their picks before you invest in a newsletters and its pick. Also, make sure you know what company you are investing in. Be smart and don't just rely on the stock symbols - find a company that to you has potential for growth.
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