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January 06 2014


Penny Stocks - The Basics

Even though the name suggests that penny stocks are stocks valued at less than a dollar, the truth is that penny stocks are stocks which are valued below $ 5. While this might seem like a good investment to some, there are many people who feel like it is a waste of money. This usually depends on the goals of an investor. But if you play it safe, investing in penny stocks can turn out to be a very lucrative proposition.

There are two basic strategies you can choose to go with when it comes to investing, going short & going long. Going short shouldn't be confused with selling short though which is totally different. (Visit this link http://playpennystocks.com for more info.)

Going long is basically a situation in which you buy a stock and keep it for a long period of time. This strategy relies on the fact that a stock’s price will go nowhere but up in the long run. These strategies even take into account reductions in price of a share due to recessionary periods. At the end of the day, the price of the stock will go up. What you need to remember here though is that while the stock market will eventually rise, this doesn't mean that all stocks will rise as well. There are times when the price of stocks will fall even though the market is rising steadily. The only way in which you can truly be sure of a price rise is if you have researched about it in detail. Another great strategy for making money with penny stocks is volatility. Skilled investors make most money when a stock is volatile.

There are a lot of investors who prefer investing in penny stocks as compared to other stocks. There are 2 main reasons for this. The main reason is because they are cheap & the second reason is because their potential for growth is very high. But if you want to make money with penny stocks, it is essential that you choose the right one because while the potential for growth is high, the potential for loss is high as well. You can become a millionaire overnight and you can also lose your entire investment in the blink of an eye. Don't make the mistake of treating penny stocks like regular stocks. Their prices fluctuate a lot more than regular stocks. There are many people who have burnt their fingers investing while investing in penny stocks. You wouldn't want to be one of them would you? So invest wisely.

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