A Basic Guide To Penny Stocks Investing

Prasen Dutta 

In penny stock investing, investors either see big gains fast or big losses fast. Penny stocks are regarded as ‘hot penny stocks' when the value of the stocks rises fast. When the tag ‘high volatility' is attached to a penny stock, it means that the particular stock's value goes up or down quickly. To make money on a hot penny stock, one needs to buy the stock on a low price, wait for that particular stock to rise steeply and then sell.


There are several online guides that can help one pick the best penny stocks. Here is a strategy that works quite well for most of the investors. The investors generally take 6 months time in this. They pretend investing. They basically keep a track on how much every stock goes up or down and makes decision on when to sell or buy the stock. After completion of 6 months, the above-mentioned advice may lead you to gain profits than losses. In such cases, it's best to stick with this advice.

While learning the penny stock strategies, the most important thing that you need to know is when to sell the stock—when the stock doubles, hurry to sell at least half of what you have. The value of stock may go triple afterwards, so in that case you already have 50% of stocks left with you. You can sell them at a high rate. However, if the value doesn't triple and falls twenty-five percent from its most recent high sell, don't worry! In such a case, you have only lost half as much as you would have if you'd held onto penny stock investing the full time. This important advice along with other penny stock tips may be helpful.

Here are some advantages of penny stock investing:

•    It has a low per share cost. 
•    Investors can purchase larger shares in an organization/company. 
•    Penny stocks may sometimes return high profit margins to lucky investors. 

Now, let us have a look at the disadvantages of investing in penny stocks: 

•    Although there are many unidentified winners in penny stock market but investors are aware of the risk factor associated with investing in penny stocks. 
•    Shares that increase in value by large percentage may generate smaller profits, if you don't have large percentage of shares. 
•    Penny stocks may be ignored for several reasons. For example, if the company is not so big, if there is not enough cash flow etc.