Some Key Information Pertaining To Penny Stocks


When you enter into the stock market world, you will hear all sorts of stories and news. It is essential that before following anyone’s advice on stocks, you should do your own research and analysis and then make a decision. For instance, you must have heard about penny stocks. It is quite surprising to observe that everyone seems to be talking about them and how those stocks soared to a higher price after some time. You will easily find investors with their penny stock stories. Instead of focusing on penny stocks too much, we will advise you to expand your knowledge about the microcap stocks. Why? Microcap stocks offer better risk-adjusted returns, more liquid alternative to private equity, and better opportunities due to less coverage. Keep learning about microcaps and also penny stocks. Some penny stocks do skyrocket, but you need to know which ones do and how they do. In this article, we will tell you all you need to know about penny stocks. Let’s get started.

Penny Stocks

As you can make out from their name, penny stocks are not high priced stocks. They are usually under $5 a share. Normally, you won’t find them trade on an organized exchange but on the institutional stock trading desks, which are known as over-the-counter market place. Another name for penny stocks is pink sheet stocks. These stocks belong to small companies that do not even publish their financials and important company news because they are not registered with the Securities and Exchange Commission. Keep in mind that by not being registered, penny stocks become quite speculative because they are unregulated stocks. However, it is essential to note that some penny stocks belong to great small companies that go on to become market leaders after some time.

How Penny Stocks Go Up

In most cases, as soon as there is some good or positive news from the company, prices of penny stocks start to rise. Penny stocks only have few shares trading in the market and are regarded as illiquid. Due to these characteristics, any positive news usually result in rise in prices of these stocks. Why? Traders want to purchase shares to fill orders. In order to do that, they increase their bids to draw selling by stockholders who are looking to make profits. If you are new to stock market investing, be aware that stock promoters deliberately pump the stocks by spreading stock tips and news that a penny stock is about to rise in price. And when the price starts to go up, they immediately dump their stocks in order to make good profits. Since those penny stock will come back to their previous level after some time, beginner stock investors end up making huge losses.

Penny stocks have helped many investors make a lot of money. But, you must first learn about them as much as you can before getting involved with them. You can check websites online that post news related to penny stocks and microcaps. We will advice you to focus more on microcaps for now as a beginner.

Comments

Post a Comment

Popular posts from this blog

Benefits and Risks Associated With Micro Cap Investments

  The stock market is surely not for the faint-hearted; it carries a huge amount of risk. Depending on your risk appetite, you should think of investing or staying away from it. While the risk exists, it also means huge returns. You may feel overwhelmed with these types of investments, however, once you start appreciating the market and understand how it works, you can make a living of it.  Types of Stocks  There are primarily four types of stocks, we list them in order of increasing risk. n   Large Cap. n   Mid Cap. n   Small Cap. n   Micro Cap. Micro Cap Investing For this blog, we put all the attention on micro caps, which is the riskiest of them all. We begin with telling you why should you invest in micro caps, or to rephrase the question: What are the benefits associated with  micro cap   stock investments?  Pros  On a superficial level, it may seem like investing in large caps makes more sense as you are i...
Read more

Pragmatic Tips for Long-Term Investment in the Stock Market

Long-term investing varies greatly from achieving short-term gains in the stock market. Based on your goals and expected returns, you need to base your decision on whether you want to keep investing for the long term or get quick gains by trading in the market. However, one thing is certain - you cannot generate wealth by intraday trading or swing trading. Yes, you can make some quick bucks, however to create wealth, you need to become a long-term investor. For example, look at the legendary investor Warren Buffett. When he puts his money in a company stock, he envisions the company to be competitive even 20 years down the line. You can also set yourself up to become financially independent by thinking long-term. Here are a few practical tips to help you navigate long-term investment in the stock market. Diversification Diversification is the basic mantra when it comes to investing for the long term. You must spread the risk by investing in different stocks in different markets. As...
Read more

Making The Most Of Investment Conferences

  Conferences are excellent opportunities to exchange ideas and build network. When we talk specifically about investor/investment conference, they allow you to share your part of the story to prospective investors. During such virtual investorconferences , you will connect with several investors who have come to invest in potential companies. You need to pitch in the right way and get funded to expand and scale your business operations. You can be setting up meeting one-on-one or you may be presenting your project to a small group, irrespective of the chosen platform, it is important to tailor your presentation in the best possible way. Here are some helpful tips that will increase your exposure and create an impact. To begin with, you need to know whether you should actually take part in the conference. Not all conferences would give you the leverage to showcase your product or project. There will be times when you are going to be a dormant participant. In case you are in an indu...
Read more