According to the name, Penny stocks are stocks that trade at a price lower than a dollar. Nevertheless, this is not the case every time.
(prHWY.com) June 28, 2012 - New York, NY -- According to the name, Penny stocks are stocks that trade at a price lower than a dollar. Nevertheless, this is not the case every time. Some stocks that trade at a price lower than five dollar are also considered as a part of these stocks. Majority of the stocks share a common characteristic of being highly volatile, irrespective of what the value of the stock is. As these stocks carry a greater amount of return, they tend to reward their investors according. It is for this reason investors even get to double their initial investment, which makes them of great interest to speculators.
These types of stock are not listed on the known stock exchanges such as the NYSE (New York Stock Exchange), AMEX (American Stock Exchange) and so on. Therefore, they are traded in over-the-counter market. The investors of Penny stocks are not required to have a huge investment in order to start trading. People can invest small amounts and earn a humble return in it. Furthermore, these stocks have the potential to more than double the initial investment. The investor only needs to have the required set of skills to turn this small amount into huge numbers. As the initial investment is low, the investor need not worry about the amount of loss as the loss will be limited to the amount that has been invested. In case the loss has been incurred, it will not be difficult for the investor to invest again.
Investors who are skilled at trading, usually, prefer investing in such stocks. This is because these stocks can be bought at cheap prices and also because they have an infinite prospective for growth. Many a times, Penny stocks can turn into stocks with great value and hence provide the investor with huge fortunes. As prices of such stocks are extremely volatile and unpredictable, the regulations applicable on other stocks can't be applied for them.
Investors interested in short-term trading and looking to make huge profits can buy huge numbers of cheap stocks at a low price and then sell them at a higher price. However, when investing in a stock, price of the stock is not the only factor to be considered. The individual needs to consider the volume of the shares being traded, financial stability of the corporation, present and future business plans. This will give the investor an idea about the risk involved with the investment.
Contact Info:
info@stocklegends.com
http://www.stocklegends.com/
###