Unlike what the name might suggest, penny stocks are not stocks that trade for a penny. Closely enough though, they trade for $5 or less.
They are seen as Wall Street’s Wild West, an untamed world of investing, detached from the glitz and media coverage that comes with stocks traded on a major exchange.
Penny stocks are really great! They don’t get enough attention
Characteristic to penny stocks is their intense volatility. The value of a penny stock could rise or fall dramatically based on a something as trivial as an announcement. These stocks trade outside the major market exchanges, say the NASDAQ or NYSE. They are highly speculative and highly risky too.
As with any good thing in life, there is always a twist. This principle trickles down to the penny stocks as well. Even with the potential gains to be reaped, there are numerous risks to it. The attendant lack of real-time information as regards penny stocks, combined with the occasional lack of liquidity could make penny stocks a red zone for some people. If you are one of those people, I would advise you to stop continue reading at this point. It gets sweeter from here.
Why trade penny stocks?
With all the risks involved, why would anyone want to put money in a penny stock anyway? The answer is the same reason for which it is so risky: VOLATILITY. Because penny stocks are so prone to hysterical fluctuations, one could luck out with a stock that jumps from $0.08 to $8 in two weeks.
This is equivalent to a 10,000% profit. Crazy right?
Believe me though, it happened before and it is in fact a common sight in the penny stocks market.
Any rewards to trading penny stocks?
The best example that comes to mind when I think about penny trade is the internet sensation, Timothy Sykes. While in high school, he used $12,000 of his personal money to begin trading penny stocks. This earned him $1.65 million by the time he was 21. He also teaches penny stock trading. He has a youtube channel which he uses for this purpose.
Connor Bruggermann! How could I forget Connor Bruggermann? He started out with $10,000 he had saved up for two years working as a busboy. Initially, he dived into big stocks such as apple and Verizon. The problem with these big shots though, is that while they are lucrative, they lack spontaneous growth and require huge capital to reap substantial benefits.
For these reasons, Connor liquidated his positions at these big names and put almost everything into American Community Development Group Inc. (ACYD), which was selling for $0.003 per share at the time. By the next year, Bruggermann turned that $10,000 into over $300,000, mostly by trading penny stocks.
How do I start trading?
I could go on and on about the numerous people who made it from trading penny stocks, but I am sure you already get my drift. All you need to get started is a willingness to learn the intricacies of penny trading. Below are some helpful youtube links to get you started on trading penny stocks:
Good luck!