Are Penny stocks a good place to invest in?
Penny Stocks are very volatile and can change direction pretty quickly. When a person starts to trade in the penny stock arena, you have to be very conscious of everything that is going on around it including news, speculation, promoters and rumors.
The old saying in the industry is “Buy on Rumors, Sell on News”. This means that people are buying the stock on the rumors that something big is coming up and will sell their stock once the news hits as now the information was made public. It works a majority of the time, but it is not a rule that is set in stone, just one that is heard around the industry.
Microcap and Smallcap penny stocks are very high risk and volatile. The plus side to this is the gains that can be made from this are tremendous.
Penny Stocks are not meant for everyone, though this does not mean that you should not enter the arena, but just for you to be careful. There are a lot of studies and steps involved in becoming a good trader. Doing your homework diligently, being patient and knowing when to take your profits / losses will help you through to figure out the game. Learning to read charts and time stocks is important. Knowing certain industries or being knowledgeable in a certain area will allow you to excel in stocks of that industry. For example, if you have some knowledge about the natural resources industry such as minerals and oils, you can seek out those startup companies, most of which are located in areas such as Canada, or the Midwest.
Over the past few years, the history of this sector has done quite well, and left those people who have invested in it very happy. Their overall performance over the last few years has been astronomical. But, in the hot penny stocks to watch world, a year is an eternity. Penny stock trading here is very volatile and some make it and a lot do not.
With the right amount of due diligence (research and homework), a person can learn enough to be good at the trading game. It is a risk and a gamble, as is the entire stock market. But here, the risk and reward are a lot greater and can free yourself from your everyday concerns. Whether you are interested in earning a few extra ‘bucks’ on the side, or turning this into a career, please be careful and remember to trade with caution.
Do not let your emotions get involved with the stocks and never ‘fall in love’ with a company, as it will hurt you in the long run
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