People often say that the best way to earn money in the stock markets is to buy penny stocks. Broadly it is a good idea because if you buy penny stocks then you will get higher returns within two or three quarters. But if we look deep inside it then it is not absolutely true because it contains many hidden issues which can make your whole investment a troubled issue.
Many people believe that it is quite easy to predict the movement in the value of penny stock, but reality is far from it. The time taken for the movement in prices of these stocks is so short, that there is hardly any room to make any valid projection. As the cost of each of these penny stocks is quite low, people generally buy a good chunk of it and invest substantial amount. As such, huge amount of investment either decreases or increases in value with a small change in their prices.
The major issue when you buy penny stocks is that the penny stock market is not regulated like NASDAQ and that's what makes trading with them more risky. The lack of any regulatory authority increases the threat of illegal activities making it even more risky to tide in penny stock market. However, some of the penny stocks are listed on the major exchanges also and trading in them would be a safe bet.
The best policy to follow, if you are planning to buy penny stocks, is the 'pump and dump' policy. It is observed in most of the cases, mostly with the penny stocks that insider trading happens which results the stock to run far ahead than others and in the similar manner stock will crash without you noticing it and the change would be so fast that you will keep wondering. The penny stock trading is manipulative which increases the risk factor.
The interested group spreads tempting information about penny stocks to lure the innocent people who are not so well-informed about these companies and stock market, to buy these stocks. For wide publication of false and manipulative information they use spam, different publications and message boards as these can easily reach many people and does not cost much. The sum total of these manipulative practices results in pushing up the prices of these worthless penny stocks and once prices sufficiently go up, these groups off load their holdings and earn huge profit. Just after that due to lack of provocative information, prices of these penny stocks reach their bottom again and those who invested in them are left with worthless piece of paper.
Although you are bearing in mind to buy penny stocks with a trustworthy company, there are still other dangers. The chief hazard is that penny stocks are inclined to shift swiftly either upwards or downwards. Profit could be little or huge, but both ways it needs a lot of idea about the stock market trends in order to sell at the correct instance.
Investments have to be checked regularly. Else instead of gaining we may end up in losing money. The gap in time may lead to the gap between profit and loss.
Precision is the most important factor which will decide your fate when you buy penny stocks. The right timing can earn huge profits for you while a single error will lead towards a huge loss because penny stocks move very rapidly in the both sides and if you miss the right chance then you can miss your golden opportunity.
This means that you have to regularly keep checking how your stocks is performing you also have to be in touch and aware of what is going on in the rest of the market. Also it is important to know what is happening with the industries which may affect the performance of your shares. Naturally you will be required to spend a lot of time on computers for doing all these. To get the success as a penny stock broker, it is essential to devote time for this purpose.
Many people believe that it is quite easy to predict the movement in the value of penny stock, but reality is far from it. The time taken for the movement in prices of these stocks is so short, that there is hardly any room to make any valid projection. As the cost of each of these penny stocks is quite low, people generally buy a good chunk of it and invest substantial amount. As such, huge amount of investment either decreases or increases in value with a small change in their prices.
The major issue when you buy penny stocks is that the penny stock market is not regulated like NASDAQ and that's what makes trading with them more risky. The lack of any regulatory authority increases the threat of illegal activities making it even more risky to tide in penny stock market. However, some of the penny stocks are listed on the major exchanges also and trading in them would be a safe bet.
The best policy to follow, if you are planning to buy penny stocks, is the 'pump and dump' policy. It is observed in most of the cases, mostly with the penny stocks that insider trading happens which results the stock to run far ahead than others and in the similar manner stock will crash without you noticing it and the change would be so fast that you will keep wondering. The penny stock trading is manipulative which increases the risk factor.
The interested group spreads tempting information about penny stocks to lure the innocent people who are not so well-informed about these companies and stock market, to buy these stocks. For wide publication of false and manipulative information they use spam, different publications and message boards as these can easily reach many people and does not cost much. The sum total of these manipulative practices results in pushing up the prices of these worthless penny stocks and once prices sufficiently go up, these groups off load their holdings and earn huge profit. Just after that due to lack of provocative information, prices of these penny stocks reach their bottom again and those who invested in them are left with worthless piece of paper.
Although you are bearing in mind to buy penny stocks with a trustworthy company, there are still other dangers. The chief hazard is that penny stocks are inclined to shift swiftly either upwards or downwards. Profit could be little or huge, but both ways it needs a lot of idea about the stock market trends in order to sell at the correct instance.
Investments have to be checked regularly. Else instead of gaining we may end up in losing money. The gap in time may lead to the gap between profit and loss.
Precision is the most important factor which will decide your fate when you buy penny stocks. The right timing can earn huge profits for you while a single error will lead towards a huge loss because penny stocks move very rapidly in the both sides and if you miss the right chance then you can miss your golden opportunity.
This means that you have to regularly keep checking how your stocks is performing you also have to be in touch and aware of what is going on in the rest of the market. Also it is important to know what is happening with the industries which may affect the performance of your shares. Naturally you will be required to spend a lot of time on computers for doing all these. To get the success as a penny stock broker, it is essential to devote time for this purpose.
About the Author:
We strive to provide the best possible information on penny stock trading. If you want to find out more about how to buy penny stocks, then visit our site www.BuyPennyStocksReview.com.
No comments:
Post a Comment