More About Penny Stocks

What do you mean by best penny stocks? A penny stock is where trading occurs at low pricing, usually below 15-20 rupees. They are not listed in major share market exchanges. They are high in risk because they lack liquidity and have a small capital. The advantage with penny stock is that you can buy a lot of stocks in a day since it is cheap. It is easily manipulated as it is very cheap and millions of stocks are bought in a day. They are full of risk but give good long term profits. Profits range from 10% to 200%. There are stocks in penny market which has gone from 50 paisa to 100+ rupees. But the risk that is involved is sudden changes in supply or demand. Usually the large ownership of these stocks depends on few people. So if these people decide to sell off stocks there will be a huge bulk wanting to sell of their stock causing havoc. The stock you might want to sell might not have buyers to it that day. A person investing in a penny stock has to analyze a lot before investing in it.

You have to cautiously choose the stock you are going to buy and that can be done with detailed study of that particular stock. You have to choose the stock based on your study and not just because the mob is investing in that stock. Many new investors are attracted to invest in penny stocks because of low investment and short term profits. The investor has the luxury of buying many shares in a day. They give good profits as compared to large cap stocks. Many new investors can explore the stocks as the prices are cheap. Even if losses occur that will not be a substantial loss. Moreover, buy penny stocks are easier to buy as list of stocks are available for the users.

All they have to do is choose one and get going. But investors have to choose stocks from reputable companies. Hot penny stock minimizes the loss of lot of money so safer to use. By this investor can purchase more stock if he is not a new investor. There are certain risks involved in buying penny stocks. There are number of sites which give fake penny stocks. Penny stocks’ price are sometimes rigged and artificially inflated. Investor’s barge in looking at the cash flow involved and suffers later as prices drop when few sellers having massive ownership sell large quantities of shares. Most of the penny stocks are poorly governed and are not even registered with the government. So investors should be aware of these stocks. Profiting from penny shares is very easy provided proper care is taken. Proper study of the stock, good knowledge about the growth of the company, ability to buy the correct stock can give you guaranteed profits. Penny stock that sustain recession and maintain their position at the time of low are considered to be good stocks.

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