It’s common like many other people around the globe to be interested in penny stocks, but have no leads on how to obtain information on how things work. If you try to watch investing shows you will figure out quickly that they never talk about penny stocks. Some will call them the black sheep of the trading and investing world. After all of this being said I know you still have the question in your head. What are penny stocks and why aren’t they discussed as much in the mainstream.
A way for us being on the same page and defining the setting and limits of the discussion. In this regard, we can use as the mainstream definition of penny stocks which is any security that trades on the stock market and which does so at a valuation equal or up to $5. There are penny stocks in all sorts of fields like the pharmaceutical industry, the finance industry, healthcare, education, technology, oil, and gas; even space exploration has its fair share of companies that trade below $5.
Penny stock trades are beneficial to beginners because most that are interested might not have big money and having the ability to buy smaller stocks help the casual investor to stay in this type of market. Few don’t even have $10,000 to invest and with that type of money can fail in the stock market in a matter of hours. For instance, there are companies that cost half a million dollars for one share and the average person doesn’t have close to that so that would make most of us out of that market. Penny stocks allow you to buy more shares with less money. For instance, a stock is $5.00 and I could buy 100 shares at $500.
Penny stocks are all about profit and they could be risky, but at the same time could pay off big time. Penny stocks aren’t really any different from most investments with how much money you put in them can multiply or decrease in value based on the movement of the penny stock.