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Is There A Steeper Risk In Trading Those Low Priced Stocks?

Jun 5, 2008
Many men and women who are raw to investing in stocks think that penny stocks are the logical choice. The word penny indicates that the investment is small enough that they won't have to risk a lot for a great deal of potential.

In reality investors, novice and seasoned pros alike, that while penny stocks may not cost a lot upfront in the form of cash in hand, it could cost you more if the company's stock that you're Dealing with melt downs.
Penny stocks, unlike other kinds of steeper-priced stocks, aren't traded as often, You have to be mindful you can sell your stocks to the market when the time comes. And since they're not traded often, the pricing you're seeing can be inaccurate or out of date.

Perhaps the biggest risk in investing with penny stocks is the mere hype that goes along with it. People are receiving dozens of spam notices in their email inbox each 24-hour interval with promises of establishing a with penny stock trades.

Investing in penny stocks is like all other forms of investing in that the individual trader must take responsibiltiy and do there due diligence when studying the company accounts.

Brokerage firms that help penny stock investors trade in this type of transaction, are required to disclose the risks using a document that tells the clients exactly what the risks are before they choose to hand over their cash to trade.

Penny stocks, unlike other kinds of steeper-priced stocks, do not have as much of the interest from buyers, You have to be mindful you can sell your stocks to the market when the time comes. And since they're not traded often, the price can be suspect and not on time.

Perhaps the biggest risk in investing with penny stocks is the mere hype that goes along with it. People are receiving dozens of spam notices in their email inbox each 24-hour interval with promises of building up a large amount of money with penny stock trades.

Some unscrupulous brokerage firms also acquire a lot of the penny stocks and then offer them to investors at a broader value than what they'll be worth once the by artificial means inflated demand is gone.

Because penny stock investing requires such a small initial monetary investment, some brokers even break the rules and charge far more for their mark-up commissions. You have to be careful that they're not overcharging you.

Another trick some brokerages will adopt with penny stock traders is they will refuse to trade those stocks to the buyers once they own enough of a stock. Market manipulation come sinto play here.

Most brokerage firms operate on a fair basis, but you want to make sure your firm is handling everything with your best interest and minimizing the risks involved with penny stock investing.

Be careful which brokerage you deal with when trading in penny stocks. Some will try to rip you off on the commissions.

Another trick some brokerages will adopt with penny stock traders is they will refuse to trade those stocks to the buyers once they own enough of a stock. Market manipulation come sinto play here.
About the Author
Mark Crisp The momentum Stock Trader Free 7 Part Momentum Course at: http://www.stressfreetrading.com
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