The Penny Stock Newsletter

The Penny Stock Newsletter
Here we go over a couple of questions and answers regarding penny stocks.

What are penny stocks?

Penny stocks are shares in public companies. Unlike the stocks and shares in larger blue chip companies, penny stocks trade at less than $ 1.00 each, which makes then a great way for beginners to dip a toe in the exciting world of stocks and shares investment.

Investing in penny stocks has the potential to make you seriously rich and some lucky individuals have made a fortune with just one trade. However, this is rare and most of the time, you will need to be disciplined enough to see penny stocks investment as a long term venture rather than a get-rich-quick scheme.

What are the disadvantages of investing in penny stocks?

Buying penny stocks requires money, and not everyone has spare cash lying around. You might think investing in stocks and shares is a great way to build up a nest egg for a nice holiday / fast car / comfortable retirement fund but, unfortunately, in this instance you have to spend money to make money.

You also need some kind of system that warns you when the time is right to sell your penny stocks. Ideally, the way to make money on penny stocks is to buy low and sell high. Sounds simple, right? Well unless you have a good system that warns you when your penny stocks are about to fall in value, you might end up losing money instead of making a profit.

Trading in penny stocks is notoriously prone to market manipulation and over the years there have been many scams related to penny stocks. Certain individuals have bought up vast numbers of stocks in a certain company to inflate its market value, and then flooded the market with the same shares to make a huge profit at the expense of smaller traders.

What is the best way to minimize risk in penny stocks investment?

It is never a good idea to invest money that you cannot afford to lose. If you are down to your last $ 1,000 and losing it would mean losing your home, do not gamble on the stock market. But if you have some spare cash and the thought of making some extra is attractive, then go for it.

Penny stocks can offer some great returns if you invest in the right companies, but you need to pick your penny stocks wisely and have a good system in place to protect you from big losses. In the beginning, try investing using pretend money. Pick some penny stocks and see how they perform. If at the end of the period you have made a profit, it is time to try investing real money!

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