Tuesday 16 February 2016

Let us find out why people are attracted to penny stocks to buy



Many people invest money in cheaper stocks for understanding the business of stock trading. They think that by investing very small amounts in penny stocks to watch they can reap high profits. In fact, investing money in stock exchanges is a long term investment, which will take years to get tangible incomes from such investments. But statistics has shown that stock exchange trading in penny stock to buy is a profitable business, which has got an annual return of about 37 % for the last 10 years.
Now let us examine what is meant by penny share. Penny share gets its name from the mere fact they are very cheap. The value of each share is below $5 and can be even $1 or can be in pennies also. Because of this low value, they have a very speculative appeal.

Advantages of Penny Stocks

1.       As the per share price is very low, there is no need for a huge investment in penny stocks to watch.
2.       These penny stocks are easily available in the market as penny stocks to buy and anybody can buy it directly.
3.       The penny stock price moves quickly and therefore there are chances of getting high income if everything turns out positively and the investor plays prudently.
4.       Sometimes penny stock is traded as mid-cap stock, which has greater profit potentials.

Disadvantages

1.       It is very easy to buy penny stocks as penny stocks to watch are always available. But selling penny stocks is not an easy task.
2.       If you own penny stocks of a bankrupt company chances of loss are imminent and grave.
3.       Pump and dump scams in penny stock to buy are very dangerous. The demand for a stock will rise abruptly during pump stage. But if you buy any stocks of this type, you will find it difficult to sell of these penny stocks for sale without incurring some losses.
4.       A company with no or little track record may move to bankrupt stage before the investor comes to know about it.

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