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Why Risk on Penny Stocks?

Some people who have not heard of penny stocks before, may assume that penny stocks is a stock investment that literally involves the exchange of pennies, or in other words, cents. Some others who may have heard a bit of information would define it as common stock trading for under $5. While both definitions are still acceptable, we will describe it as “any company trading through the ‘over the counter market.”

“No pain, no gain” is what people expect in this type of business. There is an abundant number of investments one might want to be involved in. Micro cap investing has proved to be one of the most worthwhile enterprises. It has the potential of acquiring big profits in only a matter of time. Penny stocks are unpredictable and it is common for stocks to either move upwards or downwards by 25%. The nature of its uncertainty makes the business very promising and very crucial. So why should you be investing any at all? Answer is quite simple with a bit of philosophy: “the more risks you take the more rewards you are posed to gain”. If you want to play safe, then this is not fit for you.

If you’re asking whether it’s worth investing on penny stocks or not, the answer depends on how you are going to deal with it personally. Sure you may encounter a lot of frustration and pressure but if you are dedicated and persistent enough to learn about how penny stocks behave, then chances are, you may be doubling or tripling your money in a month.

The primary requirement you need to have in order to get started is a brokerage account. Find a reliable brokerage service and have an account opened. Each time you sell or purchase a stock, a small fee is deducted to your account by your broker. Usually, the service will walk you through to how you get started. For starters, it is highly suggested to invest a small amount of money you can afford to lose. Losing the money at stake will not make your business suffer. If you successfully find a winning bid, your investment will grow at a small rate but the experience you gain from there will be a lot.

I can not stress enough the need to be consistent in here. Keep in mind that when you purchase penny stocks, it’s not like dividend investing where you can buy and forget, instead you’ll need to make sure to follow them for the next days, weeks or even months. Speak with the company’s point of contact and check for new products, research as to what product they have advantageous over other stocks you find interest in or simply inspect who their rivals are for information.

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31. May, 2011

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