Title: Do penny stocks make money?
1Do penny stocks make money?
2Penny stocks are those that are valued at 5 per
share or less. They are viewed as a risky gamble
of their low liquidity and high volatility.
However, the balance between risk and reward is
far more dramatic with penny stocks than with
conventional stocks. Due to their low cost, you
can purchase a substantial amount of shares.
Despite their instability, penny stocks can be
lucrative.
In other words, you can make money from investing
in penny stocks, provided you do the following
3Invest in a growing company
Conduct thorough research on the companies you
are interested in. Ask yourself, is the company
growing? Do not simply invest in a penny stocks
because you read positive reviews about it or
your neighbor gave you a hot tip. Investigate the
company. Do they have metrics for success? Are
you convinced by the companys vision and
product? Does the CEO of the company have a
record of success? Look into these matters before
buying the companys shares.
4Sell fast, not short
One of the temptations of penny stocks is the
ability to make a 40 profit in just a few days.
The best strategy to use with penny stocks is to
sell it quickly. Your logic may tell you to hold
on to the stock and seek a larger price. For
example, if rolling the dice once won you 500,
then rolling it twice may get you 1000, right?
This is a logical fallacy. Aiming for a larger
return may hurt you quickly. Accept what youve
earned and move on. Stick to the poker tactic,
walk away when youre up.
You also want to avoid selling short. This is a
difficult technique and one that is used by an
experienced trader. You may be enticed to sell a
pumped-up stock too quickly. But in doing so, you
will hurt yourself.
5Dont rely on emotions
- The company selling the penny stocks may work
very hard to convince investors and buyers to
believe in the value of their stock. - They may conjure up stories, in an effort to
convince people that they are going to be a big
success. - Such companies may use marketing tactics to
spread the news about their prosperity and
growth- to artificially increase their share
price.
6- Stay logical, stay objective. Be cynical and
evaluate the potential of a company. - Examine the facts. Will clicking a few buttons
make you rich? - Companies mix psychological tricks with marketing
gimmicks to dupe buyers. Before placing any
trade, scrutinize over the truth. - In general, penny stocks do make money. However,
you need to research the company you are
investing in, use fast selling techniques and
rely on your logical reasoning to make gains in
penny stocks.
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