1. Penny Stock Investing: A Simple Guide for Beginners
Penny stock investing is a kind of investment that is considered to be highly threatening
because it lacks liquidity, small capitalization, limited following and disclosure. Penny stocks
are also those stocks that are traded in the market at a low price and which owns a market
capitalization that is way beyond what the usual stock market exchanges. This stock is
considered to be a small company with highly speculative and illiquid shares. The company is
then subject to those limited listing requirements containing regulatory standards in order to
enter the stock market.
Increasing your profitability is something that you can expect when you invest in the stock
market using penny stocks. However, this investment also gives you the ultimate risk of losing
your capital. To ensure that you are totally benefited from investing in penny stocks, you have to
see to it that you take a closer look on the certain company that you consider investing into.
Make a thorough research on the company and make sure that it is reliable. You should never
allow yourself to be tempted to invest in a company just because its initial public offering is at a
low cost prior to making your actual research. This will ensure your safety and allows you to
gain profit from your investment.
It is also advisable that you look into the shares the company is consistently trading prior to
doing penny stock investing. When it comes to this, you should first study the stock’s liquidity.
You should do this as it is proven that if there is no volume in certain shares, you will end up
losing big time. You also have to consider the consistency of the shares you are planning to
invest in. The consistency that you have to consider here is the rate of return of your investment.
The rate of return should be consistently high enough to ensure your profitability. Checking
whether the company has the ability to increase your profit is something that you should also put
into consideration prior to investing in penny stocks. Remember that among the greatest features
of a penny stock is its volatility. It has the ability to quickly move up or move down its price so
you have to choose the company that can still make you earn profit even despite these changes in
the stock’s price. This will allow you to earn profit beyond what you imagine.