Introduction To Penny Stocks

by Mansi Dandekar Financial Blogger

Penny Stocks are those shares that are traded on a low amount. These shares are mostly small companies whose capital is low. They mostly don't have a big turnover and mostly these companies are in loss or make a lesser profit. In such stocks, only the promoters or their representatives are engaged in trading. The prices of these shares are increased by publishing false or true news. These stocks are traded in very low volumes, that is why we can say that there is a problem of liquidity in these stocks. Many times an investor gets stuck in these due to the low price, but investing in such shares is risky at the behest of someone.

Should Invest in Penny Stocks or not

Because penny stocks are available at very low prices, then there is a desire among investors to invest in them. They are also more likely to increase the price in a short time. A stock can also give high returns in a short time. For example, you buy a share for two rupees and if that stock becomes even for three rupees, then your investment increases by fifty percent. But there are many risks in such trading. Often, the traders get out of such shares on the spot when the price rises, but the prices come back again and the investors keep on handing. Therefore, it should be traded with help of Best Stock Tips and proper guidance.

Penny Stocks can also be turnaround shares

Sometimes a turnaround share can also be found in penny stocks i.e. such stocks that are going to profit from losses. If you identify and invest in such a stock, then it can also prove to be a good investment. In Penny Stocks,  if a company has a good history and has gone into a loss due to certain circumstances but there is a demand for the company's goods in the market, if there are a large capital and a good sale, then the risk of investing is low. Many times many companies go into losses after taking a large loan. After some time, by expanding the loan, there is a possibility of the company coming back to profit. The shares of such companies can be called turnaround shares.

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About Mansi Dandekar Freshman   Financial Blogger

6 connections, 1 recommendations, 30 honor points.
Joined APSense since, December 15th, 2018, From Indore, India.

Created on Nov 4th 2019 06:40. Viewed 325 times.


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