Penny stocks are securities or stocks which are sold by smaller new companies. They are generally sold because companies are seeking money for expansion, basic operations, and even for commencement of business. This article includes:
- Know in depth on penny stocks
- How a dishonest penny brokerage firm can cause trouble to you?
- Why shouldn't penny stocks occupy a major share in your portfolio?
What You Need To Know When Buying Penny Stocks
Experts suggest that investors interested in buying penny stocks orient themselves as much as possible at this type of stock. Experts also suggest that investors should:
Research Any Brokerage Firms Specializing In Penny Stocks Carefully
If the company uses hard sell techniques, promises you insider information, or makes unreasonable claims about penny stocks, walk away. A reputable broker will admit that most investors will lose money with penny stocks. Anyone who promotes penny stocks as a sure bet to or an unrealistic and tempting scheme is not being honest with you. Make sure that you also investigate whether a brokerage firm had any complaints against it. Currently, several such firms are facing serious legal problems from disgruntled past customers.
Research Any Companies are Considering Buying Pot Penny Stocks From Carefully
Only buy penny stocks from a company that has very experienced and proven business people at the helm, does business in the market that is currently booming, sells excellent and unpatented products or services, has an excellent business model, and seems to have a real chance of success. You should only invest in a company that honestly has all these features.
Be Aware That Brokers and Brokerage Firms Often Artificially Increase Prices of Penny Stocks
They may start selling large amounts of stocks that they have bought in order to create a false sense of demand. Once they have sold their stocks, the price of the penny stocks will drop dramatically, making your initial investment almost worthless.
Don't Make Penny Stocks Your Main Portfolio
Experts suggest that penny stocks take up 5% to 10% at an absolute maximum of your overall investment portfolio. You should be prepared to lose any money that you invest in penny stocks and should never borrow to invest in these highly volatile securities.
How This Penny Stocks Are Beneficial To Buyers
Penny stocks are very attractive to investors because they are so inexpensive. For a thousand rupees, you can buy literally thousands of stocks. There's also a very small chance that a company that you are investing in will suddenly experience tremendous profits. While this is rare, just one or two such incidents can build you a nice profit. There are investors who have made literally tens of thousands of rupees from penny stocks within a short period of time.