Are Penny Stocks right for you?
Since penny stocks are so low priced, they have the potential for huge one-day gains. However, there is a lot of risk associated with penny stocks. Timing, and risk tolerance is key when considering them.
Like all other stocks, penny stocks go up and down based on supply and demand. The more buyers bidding for a penny stock, the higher the price goes. When the sellers outnumber the buyers, a penny stock’s price will fall.
What makes penny stocks different than pricier stocks that trade on listed exchanges is that they can move extremely rapidly when sudden buying or selling pressure hits.
What is enticing about penny stocks to traders is the ability to see gains in a short amount of time, sometimes in as little as a few hours within a trading day, and other times in a few weeks. Some penny stocks have increased in price by hundreds and even thousands of percent in a matter of hours or days.
Penny stock investing is VERY risky, and you could end up losing your entire investment. But if you’re savvy enough to identify opportunities and capitalize on them, it could also be very lucrative.
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