Penny Stocks: Reasons to Trade

Penny stocks are stocks which are traded at very low prices. Although low priced penny stocks, these are very risky trades for an investor. These stocks are low capitalized stocks with high volatility in their stock price which always remain a worry some factor of an investor. These stocks are also easily prone to scams by big investors or operators and sometime even their promoters are involved in major scam activities like pump and dump schemes.click here for penny stock FAQ’s

Penny Stocks: Reasons to Trade

In spite these risk being involved in these stocks, they are liked and always in radar of traders and investors. There are certain reasons that to why these stocks are always on radar of investors, these are:

  1. Cheap & affordable: The most important reason of penny stock being traded in spite of risk involved is that they are very cheap and affordable. Penny stocks are the small company stock traded at very low price. Being low priced, they are into buying proposition of almost all scale of investors and traders.
  2. High Returns: The penny stocks have a potential to give high returns to investors and that too in short period. These are small business companies which with their innovations can make their business grow at times to come. Any growth foreseen in their business can lift the stock price at their Highs. This urge to get huge returns in short term make investors feels attractive towards these penny stocks.
  3. Exposure to Press Releases: Unlike the large cap stocks, the penny stocks are more exposed to various press releases especially by promoters. This is mainly done to bring the stock into limelight and building investor confidence, thus increase buying into that stock. Though stock price increased artificially, if the sources are good, investors take it as opportunity to invest and to earn high profits.

Good Penny Stocks FAQ’s

Penny stocks are small company stocks quoted at very low price per share. These stocks are found in abundance being traded on stock market. These are very risky trades for traders as well as for investors. The success ratio of these penny stocks to become a gem is quite low. On an average only couple of stocks out of hundred turned to become a gem and rest just a loss making proposition for investor.

To pick a good penny stock out of a lot is a major consideration and there are lots of queries by masses regarding a good penny stock.

Good Penny Stocks FAQ’s

The major FAQ (frequently asked questions) regarding a good penny stocks are as below;

  • Is Good Penny Stock hard to Find: Unlike the big stocks, penny stocks movement is not correlated to the market conditions, So they have a different system of evaluation. For finding a good penny stock, it is prerequisite to have a system that shows reliable stocks. Majority of penny stocks news are fraudulent and misleading for investors. Being cautious to this flow of information and a better system makes an easy judgment for a good penny stock. It is easy to make profits out of a good penny stock but a real difficult task to find out than gem.
  • Can Penny Stock make Investor Rich: There is a general miss conception among people that penny stocks will be a blue chip in future and a definite source to become rich. In reality not all penny stocks show growth. Majority of them fail or even can get de listed and turn whole investment into zero. Although they have a potential to give massive gains in very short period and can make you rich, but only a few belongs to a good category like this.