Page 19 - EQ Mag-issue 5

STOCK RESOURCE

PENNY STOCKS, A Great Way

To Start Investing in Stocks

By Christian F. Cartwright

ost individuals have never considered company with high potential and that is still
investing in Penny Stock, this article relatively cheap to its potential.
Mhighlights some helpful resources, is
educational, shares some research and encourages A cheap investment doesn’t translate into a poor
finding a stock broker for more information. Is investment but with stocks, it is a little bit different
investing in Penny Stocks Right for You? since a low price might have a reason behind it. There
are many publicly traded companies that reach the
Benefits of Investing in Penny Stocks border of bankruptcy and with great management
Ÿ Huge upside potential even when investing small got to improve and eventually leave the category of
amounts Penny Stock but this is not the norm in any case and
Ÿ A significant number of companies to choose from will definitely need institutional investors or a big
Ÿ Ultra-low-cost of each Penny Stock allows you to catalyst to occur for this to take place.
purchase a large number of shares

Pitfalls of Investing in Penny Stocks
Ÿ Extremely speculative
Ÿ Ultra-high volatility levels
Ÿ Low liquidity could make it difficult to sell stocks at
a later date
Ÿ Vast majority traded on OTC markets, meaning
the investment process is more complex
Ÿ Often a large disparity in spreads
Ÿ Lack of frequently available company information
in the public domain

One of the main concerns traders should have before
investing in Penny Stocks is about the exchange
where the stocks are being offered, the liquidity that
provides an electronic exchange and the ability to
jump in and out of positions with a tight spread will Top 3 types of Penny Stocks that are worth trading
not always be available when trading penny stocks
and especially when these stocks are traded on the 1. Fundamentally Strong Companies
OTC market.
The disclosure of information of Penny Stocks is very
While price swings can take months or even years to different than regular stocks, making it even more
develop in Blue Chip Companies, penny stocks can important for investors to completely investigate as
double or triple their value in an intraday basis, deeply as possible any possible prospect of
attracting day traders and investors looking to profit investment.
from the possible growth and from these extreme
movements in price. It is keen for traders to understand the business
model the company has since it could to identify
Many investors will spend time and money looking opportunities and decline others.
for a unicorn type of opportunity to invest in a

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