Penny stocks are a somewhat controversial segment of the stock market. These stocks, most of which sell for $10 per share, or in many cases, much less, are often not a part of any of the major stock exchanges. While it is technically possible to make a lot of money in a short amount of time with relatively unknown, inexpensive stocks, the market is a volatile one and it is also quite possible to lose a lot of money in the process. Can penny stocks make millionaires? Read on as we discuss this question.
One of the reasons why penny stocks are seen to be so risky is that most of the companies involved are small or relatively unknown. It is often very difficult to get any accurate information on the companies, and this makes it difficult and risky to invest in them by buying their stock. Also, these companies are sometimes subject to closing down in a moment's notice or experience other serious issues in quick, surprising fashion.
Of course, there is a lot of potential for great reward that comes along with the palpable amount of risk involved. Penny stocks can grow by over one hundred percent in just a couple of days, which is mostly due to their low selling prices. This attracts many buyers who believe that they can find the right stocks and profit substantially.
The Securities and Exchange Commission does warn that these types of low-price stocks do carry a substantial danger of fraud. This type of fraud can come in several forms. Many times, message boards or online forums are flooded with praise for a certain company, which is supposed to inflate the price of the stock as forum members jump on the "opportunity". Later, the bottom falls out when all of the supposed fans of the stock sell their shares. Spam e-mails are also used to alter the prices of these stocks.
In the end, it is up to you to decide whether you are comfortable investing in penny stocks. As mentioned earlier, there is an opportunity to make a lot of money very quickly by trading these types of stocks. Of course, as with most things, there is a lot of risk involved with chasing the potential rewards.
Regardless of your skill level in penny stock trading, there is a lot of money to be earned trading stocks if you know a few simple tips and tricks. Visit our website to access more valuable information and additional resources for stock trading: http://OnlineStockTradingInformation.com Article Source: http://EzineArticles.com/?expert=Jayda_Kaycee |
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