What is the first thing that comes to your mind when we say penny stocks?

by Mike K. Post your article at Aleshatech.com

Have you ever traded on stock-exchange? Are you a beginner and interested to know about penny stocks?

Well, when we say penny stocks the first thing that comes to our mind is money. Yes, there are many people who think that penny stock is the fastest and the easiest way to make money. But is it true? Can you make millions in no time? If yes how and if no what's the truth?

Let's see the story behind.

For a beginner, it is important to understand what is the penny stock and how can we invest?

Well, a penny stock is the low-cost stocks/shares that has a very minimal value and is traded at low margin. Though, the value of these penny stocks differs in every country; however, the costs of these stocks are very less and are mostly determined by the buyers and market participants.

Penny stocks have very high-risk factors and hence one should be very careful while investing in these stocks.

Myths about penny stocks:

Difficult to trade: With a huge market and numbers of buyers and sellers, the trading for penny stocks is not difficult. There are so many penny stock companies that are listed on the major stock exchange; making the whole buying and selling process easy.

It's a scam and not legit: Though there are few companies that fall under the low-quality category. However, this doesn't mean that all companies listed for penny stocks are not legit. You should be smart to choose the stock that has great future prospects.

The price of shares can't dip: The penny stocks market is like any other trading market where you can't guarantee the return. The price of the shares depends on various factors and you may lose all your money that you invest.

Points to remember before you invest:

Proper analysis of the stock: Choose penny stocks based on its value and not the price. Since penny stocks are of minimal value, people often invest their money in low-priced stocks than value worth stocks. Be very careful when you invest.

Prices can be manipulative: Since penny stocks are low volume stocks, these can be manipulated by brokers and promoters. Be very careful before you invest as many times, the price of these stocks can temporarily go up and you may get fall into the trap.

Understand the upper and lower circuit of a stock: Penny stocks are highly volatile in nature and hence you should do a proper analysis of the upper circuit and lower circuit of the stock. The value of these stocks is based on the demand from the buyers.

Well, penny stocks are definitely a good option to make money; however, to avoid any pitfalls, a proper research about the market and the stock is a must. Every country has a stock regulatory body that protects you from frauds and scam artists but you should be careful and smart to trade in this market and make money. Read more

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Created on Nov 28th 2017 11:35. Viewed 453 times.

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