Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Penny Stocks – Profit Or Loss?

1 min read

What is a penny stock? The term penny stock refers to any stock that is traded outside one of the major exchanges. The definition of a penny stock is a low priced speculative security. The Counter Bulletin Board stocks (OTCBB) and Pink Sheets. These are the two types of penny stocks that you will encounter. With penny stocks do not think for a minute that the game has changed

When investing in penny stocks you have the opportunity to dramatically increase your profits, however, you can just as equally loose your capital quickly. To this day like in any other money making opportunity I see lots of articles out there telling people how easy it is to make thousands, in the stock market with penny stocks. Like any other opportunity, diligence, discipline, patience and understanding are required to make money.

Because of the term penny stock, you may think that the cost of investing is minimal. This is why many folks are lured to invest in penny stocks. Penny stocks also have the potential to grow very quickly. One must also understand what goes up can come down, so rapid growth can mean rapid decline.

The low price along with the lack of stability can make penny stocks a risky investment. There is also the element of fraud. Penny stocks are often hyped through spam e-mail or offshore brokers and con-artists alike. These people are able to con people due in large part by the lack of regulation that penny stocks are required to abide by.

The bottom line is this. Don't be fooled by the notion of minimal investment and rapid profits. Apply caution.

 

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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