What, Exactly, are Penny Stocks?

December 24th, 2020 If you're completely new to the stock market, there's a lot of terminology that can be confusing. One such term that I found confusing was the term penny stocks. Before I started learning in-depth about the stock market, I thought that penny stocks referred to when someone buys a fraction of a stock. It also seemed like a great way to make quick money, but once I started reading more, I learned some valuable information that I'd like to share with you today. What is a Penny Stock? A penny stock refers to a small company's stock that typically trades for less than $5 per share. Although some penny stocks trade on large exchanges such as the NYSE, most penny stocks trade via over the counter through the OTC Bulletin Board (OTCBB). What are the Pros and Cons? Some of the success stories of Penny stocks are not as exaggerated as you might think. I've heard stories in which people put 8 cents into a share of stock, only to cash it out later for 8 dollars. But there are still heavy risks in putting money in penny stocks. Make no mistake, the affordability of penny stocks makes for a huge upside in buying them. However, a company that is willing to sell their stocks at such a low price most likely is a small company with little information available about them or their company trajectory. This means that you will have as much information to buy a penny stock, compared to buying bigger company stocks. It's also advised that you go into Penny stocks with a high risk tolerance, and you should be prepared to lose your money. Penny stocks are highly volatile and their prices can fluctuate a lot at any time. Are They Worth Investing In? Some of the success stories behind penny stocks are true, but that doesn't necessarily mean that you, as an investor, will experience the same type of success. At the end of the day, my best advice is to always look at the pros and cons of doing something, evaluate your risk tolerance, and make an informed decision from there. Be sure to check back in with us next week as we go over more stock market information and tips! Tips4Traders For more awesome tips, news and information, visit our site... Register now This email is a paid advertisement. It is for a product or service that is not offered, recommended or endorsed by Tips4Traders.com and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Tips4Traders.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for any trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. By downloading this book your information may be shared with our educational partners. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Tips4Traders.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

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