Penny stocks have become one of the most lucrative investments in recent years. You can find plenty of successful stories on the internet where traders began with just a few hundred dollars and turned them into something much more reasonable by trading top penny stocks. We’re not going to claim whether these stories are trur or not but the question still remains – why people go crazy about trading penny stocks? Why top penny stocks still act as magnet for the people who are aware of their volatile nature? In this article, we will try to break this down.
Penny Stock Definition
As regards the penny stock determination – it’s a share trading below the $5 mark (as advised by SEC). These penny stocks usually belong to relatively new companies with small-scale market capitalization and no proven record of success, which makes them fast changing and volatile per se. What’s the allure then? Due to being low priced stocks – hence speculative for both investors and traders, you don’t need to invest a large amount of capital at the initial stage. In addition, top penny stocks may have huge growths on day-to-day basis sometimes over 100%, which means once traded at $1 and skyrocketed to $2 have maximized your dollar ROI. That is exactly what is going on in the penny stock market today. However, the odds of losing the funds are higher than making a fortune from penny stocks investments that’s why 95% of traders usually fail. Do you want to hold to the remaining 5%?
Penny stock market has a huge potential to make money from but you should not underestimate the associated risk. Wonder how to start trading top penny stocks profitably? This is something we are good at but first you should know a few facts about penny stocks and associated risk.
Penny Stock Facts
1. Penny stocks usually trade on OTC bulletin boards aka Pink Sheets, which are bilateral agreements without traditional regulatory norms involved.
2. Traditional exchanges (e.g. NYSE, NASDAQ) can replace once best-performing stocks and transmit them to OTC boards as top penny stocks.
3. Many penny stocks are coming from new and little-known companies with poor balance sheets and track records.
4. Penny stock market is lacking liquidity due to low frequency of trades.
5. High speculation is very common to the penny stocks.
Given the unstable nature of penny stocks, traders keep hunting down numerous top penny stocks and actually make very good money on them.
1. Low price per share – low initial investment and a penny stock is worth it.
2. Top penny stocks are the leaders in the sector. Find your sector and ride up the wave of profit in 2018.
3. In this day and age, you can buy penny stocks online without leaving home.
4. Low costs make you diversify your portfolio with a number of top penny stocks.
5. Growth rate may run over 100%, which brings you a solid cash flow in just a few days.
6. Trade your own capital and don’t borrow it from the lenders. Penny stock investment allows you to do so.