Penny stocks are any low price stock and promising stocks in the future. They are common shares of small companies that are traded at low prices. They often has low market capitalization because of their low prices, in the united states any tocks valued below $5 is a penny stocks , and are not listed on the national exchange. In the United Kingdom, any stock valued below £1 is considered a penny stocks.
Most stocks today started from penny stocks, all peak stocks where once a penny stocks, they started from penny stocks. A unit stock of Berkshire Hathaway , a company owned by warren buffet, one of the world richest man, goes up to $10 000 , this was once a penny stock. Microsoft was once a penny stocks, what does that mean? , with time penny stocks of today are going to be ’’top stocks’’. Penny stocks could turn in more than 200% of original investment. One thing with penny stock is that they don’t cost much but promise you good profits but trading penny stock could also make you to lose money. see on private placement
penny stock is speculative and highly risky but could turn you into a millionaire instantly, for example in Nigeria in December 2006 eternal oil was selling at N2 just in two months time, it turn to N6, if to say you were lucky to invest two million naira at that time, that two million naira would have turn into six million naira just in two month. Making a profits of up to 200% of your total investment for you, also Japan oil was also selling at 0.99k at that same time if you were lucky to buy that stock that time , you would have sold it at N2.74 in February, you would have made over 174% returns. Before picking a penny stocks look for those with low volume of shares, with good management and good growth in profits and turnover. Also to start making money in penny stocks today you have to put this into place.
· Get a reliable stockbroker, a registered stockbroker who knows the market of penny stocks.
· Know how much you are willing to invest into penny stock, more money means much risk but also much potential profits.
· Also know the aim of buying the penny stocks, is it for short time or long time? Know how long you want to keep it or are you just buying for capital appreciation.
· Also check why the price of the stock is low, is it due to lack of fun or mismanagement, if due to lack of fund go for it as investors will definitely find it but it is due to mismanagement don’t buy unless there is a change in the management.
· Also the market capitalization is one of the factors that attract investors into buy a stock.
· Be watchful of penny stocks scammers, this are investors that buy and promote the stocks, in doing so the price of the stock goes up and immediately sell it off to reap profits.