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
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:
- 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.
- 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.
- 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.