Penny stocks are traded for pennies or even less than a dollar. Penny stocks are traded on the pink sheets or Over-The-Counter Bulletin Board. Unlike normal stocks like ETF, bonds penny stocks are very much dangerous. They are very much risky due to its liquidity, limited resources, etc. Remember there is a huge risk with penny stocks. You never know when these stocks will go up and come down drastically. Read on to know why trading penny stocks is lethal.
The fact is one can earn good money by trading penny stocks. But again you are not guaranteed success in stock market all the time. Both success and failure are associated with stock market. For example you bought 10,000 shares at Rs 0.50, total cost of those shares will be Rs 5000. If the share price increase to Rs 1 than you can book Rs 5000 profit. Read on to know the trading penny stock rules.
Rules for Trading Penny Stocks
- Past, present and future everything matters in stock market. Similarly have a look at the core aspect of penny stocks before buying them. Don’t believe management go with your instincts.
- Make through enquiry about company, find debts, go through social profiles, email promotions that give you complete information about the company.
- Greed is one of the worst quality one can have while trading penny stocks. When you are in profits just sell penny stocks you are holding.
- Don’t believe others specially companies that are offering penny stocks. Make through research, analysis before trading in penny stocks.
- Never ever go for short selling in penny stocks rather hold on to stock and wait for the right moment to get minimum profits.
- Don’t go for stocks that are offered at less than Rs 1 as there won’t be any liquidity to book profits.
- Pump and dump technique is one of the best techniques to get good returns on penny stocks. Having penny stock and convince other to buy these shares and show them they are very much worthy.
- Analysis is one of the best ways to find the potential stocks that are good for investments and get you good returns.
- Never ever invest in penny stock of a company that has gone bankrupt and financially poor. Avoid these penny stocks to avoid losses