Penny stocks are good for the new investors


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Penny stocks are good for the new investors

  1. 1. Penny Stocks Are Good For The New Investors
  2. 2. To new investors who have limited funds to invest, penny stocks may be a good option. There are penny stocks specially in new or up and companies, or companies those are on their last leg and treading water. This doesn't mean those companies that have fallen off the big lists aren't worth to invest. All the same, they have been known to pick themselves up, reinvent themselves, and find themselves back onto the big lists. For the sake of this article, however, penny stocks are sometimes big companies fall to a downward spiral, which makes them, just like the new companies, somewhat of a risk.
  3. 3. Penny stocks are those stocks classified by the SEC (Securities and Exchange Commission) sell for less than $5 a share. There are also stocks selling less than three dollars or even one are considered as penny stocks by other exchanges. Penny stocks, essentially, are those stocks not exchanges on the major exchanges such as NYCE, AMEX and NASDAQ. It is really depends on the exchange in which you are trading. Penny stocks are little more risky than many of the rest for some good reasons. And because they are risky, on the other hand, they are also quite profitable for those who manage to trade penny stocks successfully.
  4. 4. For those who are fortunate, the risks in trading penny stock go well beyond and a good reason is the payoffs are so rewarding. Trading penny stocks relies more on a pot of lucks, and skill plays only a small part. If you are a gambler in native, this is definitely a game for you. You are entering into penny stock trading with the firm understanding that you are not likely to be successful. In fact, chances are good that you will lose as much as you make from the prospect. Even though, there are those who have managed to defy the odds and win quite handsomely in the game as we come to know as penny stock trading.
  5. 5. Before you begin to trade in the highly volatile market, there are a few things you must keep in mind. First of all, penny stocks are not regular stocks where they are heavily traded and at most of the time always someone waiting in line to buy. On the other hand, when you sell, it could be a while before buyer comes along. This is to tell you that penny stocks are not the most liquid stocks on the planet, and if you need quick access to your money, this is definitely not the stock for you.
  6. 6. Another thing to bear in mind is when comes to penny stocks, there is often very little information on these companies. Unless you have excellent research skills and the time and energy to put them to use for your training endeavors. You are very unlikely to find much background and financial information on these companies opposed to many publicly traded companies that are pretty much required to open their books to investors. This is dangerous to investors because knowledge is important and schemes are plenty.
  7. 7. Every single penny you invest in the penny stocks should be that you are very well prepared to lose and pretty happy to earn a return with you. You could hit the lottery on your penny stock investment and earn literally three to four (or even much more) times what you invested in your stocks. Chances are that the opposite is the case that you will lose your investment. As long as you are prepared to deal with the consequences and allow you to have a pleasantly surprised, when your trades pay off, you might be the perfect person to trade in the penny stock market.
  8. 8. When making your decision about the types of stocks, bonds, or funds you want to include in your portfolio, you may consider to include a few penny stocks for the sake of diversity and take risk to a small amount of money on a long slot. That long shot could just pay off.
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