The appeal of trading penny stocks and playing the risk game is that they can make you tons of money. It’s a rule of thumb to only invest with money that you can afford to lose in the first place. Don’t ever put your savings into a penny stock.
The thrills of penny stock trading are that you can follow the progress of your stocks right on your computer or phone. This can give many people an adrenaline rush. If you don’t have too much money to play with, that is what makes penny stocks attractive. They cost very little and can be life changing investments sometimes.
There are some important factors to understand when learning how to trade penny stocks. The first step is to know what these penny stocks actually are.
Generally the term penny stocks refer to stock trading at below $5 per share. Some would even say they are stocks under $2.00 a share or $1.00 a share. These stocks are traded outside of the main world exchanges such as the NYSE or NASDAQ. The nature of these penny stocks can be very unpredictable and temperamental. They trade on the OTC over the counter board.
Trying to predict how penny stocks will move can be very daunting. These stocks are very cheap so buying thousands of shares is possible and the moves can be big, up or down. These stocks are priced cheap for a reason though. They are very volatile and sometimes the companies may not be as legit as you think. You need to do as much research as possible on ANY penny stock you put your money into or are planning to put money into.
Trading penny stocks can be lucrative and it is possible to acquire good profits when looking for quick returns. Market strategies, preparation and time sat in front of the computer screen are very important with controlling your investment. What if you see stock prices falling before your very eyes? Do you sell, or hope for recovery? With a lot of research you may be more equipped to answer these questions.
Penny stock trading is not for the faint of heart so make sure you are ready to trade them.