Beneficial yet a Bit Riskier: All Penny Stocks
If you are dealing with all penny stocks, you must know about the risks. These stocks have their certificate printed on bad quality papers. They attract limited numbers of buyers and sellers. Such kinds of stocks are perfect for risk takers. All penny stocks are like being in a swing and going back and forth. You will get a reward when the swing is up. The swing is up when there are low volatility and many buyers and sellers.
Reasons for selecting penny stocks
Even though they are risky, many people have made huge profits by trading on these stocks. There is a good amount of money flowing for the traders. The growth of income is sometimes 10% more than the previous year. There are good investment plans and increase in revenue. There is a great record of earnings for each share. There is a force to increase the original amount, and the result is a bag full of money. Some companies showed stability in the growth of money. Some companies have performance greater than the others do. Many traders prefer the penny stocks because there is always space for more growth. If a stock rises by only 20 cents and rose to 10 cents, you will have made a fifty percent return.
Why is it dangerous
Not all such stocks have much information about them available. People want to invest their money. It is not a good idea to invest in something you do not know. People do not know much about all penny stocks. The details about all penny stocks are hard to find. When you need to make a decision about something, you need to check it. Nothing is clear on penny stocks. It is all a blur. It is all a cloud of confusion.
Liquidity is a Crucial Element
Liquidity is a term used to describe that a property can be sold or bought without its price going down. Suppose it is worth $5000, it will be $5000. In all penny stocks, the property bought or sold is money. The platform where the buying and selling take pace is the stock market. It is dangerous because they sometimes lack liquidity. Problems come up. First, you will not find someone to buy your stock. Secondly, with no buyers, you will fail to sell the stock. The solution is to buy many stocks at the same time and sell it, only when you get good buyers.
It is hard to decide whether a company is going to go in a comfort zone or going to confront difficulties. They have the least requirement needed. Some people consider the minimum requirement as a safe spot for landing. The solution could be if you kept a diary. You should buy a diary to write about just stocks and trade. Start from the very first day you join the stock market. Write down all your progress and how much you are making. Be sure to write how much you are making and use graph papers to draw graphs. Try to get a graph which is a curve going up. Even when you learn something about all penny stocks or trade, you can write that down. Having a diary will make your work easy. You can later find out what mistake you made in the past. You can understand how it was in the beginning.
There are many swindles about penny stocks. Some reports say that there were messages from them asking for money. They want to take the money from the traders. The investment is always going to be unsuccessful. Some people think all penny stocks are traps. Many hackers pretend to be all penny stocks and may send an e-mail containing the virus.