Is it Worth the Risk of Buying Penny Stocks Online?
It is sure that most individuals have seen advertisements at some point of time of several people making huge profits, while purchasing penny stocks from the internet. The net has rather become an important source not only for shopping products and services, but also a major way to earn a good amount of money. There are well known sites that do provide assistance to individuals who are interested to buy and sell penny stocks. The question that most individuals have in mind is, “Is it tough to carry on online trade, is it worth the risk and what type of penny stocks to buy?
Understanding the different factors of online penny stock trading
As a matter of fact, there are some risks involved with making investments in the different types of stocks. It is to be understood that penny stocks basically, are any type of stock, whose value is below $5. Most business establishments that do own such stocks of this particular micro cap category, either are a startup company or on the brink of bankruptcy. Since, the price of the stock is quite low, there is enough potentiality for individuals to purchase a good amount of quantity of stock for manipulating the price. But the question is “How such manipulation works?” It generally begins with penny stock guru. One can find it all over the net, while looking for penny stocks. Such gurus, generally try to being pump and dump process.
How does the pump & dump function?
When stock guru plans to perform pump and dump, the very first thing that they search for is a stock of low value, which can be manipulated easily. On finding an ideal stock, the next possible thing that they undertake is in purchasing a good volume of such stocks at a throw away price. Also, they try to convince everyone, following the trade to make investments in this stock and to promote is as the number one pick. Once, a majority of people has invested in such stocks, the guru then goes ahead to sell every stock that they hold for a good profit, whereas, others are left with a worthless stock.
An easy way to locate a site, which has been trying to have the price of a stock manipulated, is in finding one, which offers free suggestions and advice. But, this does not mean that every site that is present on the web and offering free advice has been into this. An expert or professional can make out with his experience and expertise. Rather than searching for such guru websites for finding the right penny stocks to buy, the individuals are better suggested to do his own research.
It is better to search for organizations that do show some valuable news in regards to authentic potential growth. If an establishment is discussing on a product that is to be launched soon and it is a promising product that sounds promising, then it is a better indication of the stock having the potential chance to move up. In case, the organization has released such products in the recent past, it would be a good idea to have a look at those stock trends. In case, the previous product that was launched had similar type of buzz that caused the stock to move upwards, then there is undoubtedly a better chance of this being repeated again. However, it is to be remembered that nothing is guaranteed in regards to penny stocks.
It is to be made sure that such companies tend to have a good amount of buzz, or else the individual can simply land with stock that are worthless and that cannot be sold. Another important factor that the individual needs to consider is the fact that they should never trade in those stocks and invest their money, which they might feel dicey or cannot afford to lose. Since, pump & dump is just an instance of the risks involved with the penny stocks, the individual needs to do proper research, before actually investing on them.
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Category: Investing
