At the request of many of our readers, we will explain in depth what “penny stocks” are, and by investing in these stocks they were able to make huge profits. You may be interested in investing in penny stocks to double your money quickly. But, before blindly investing in penny stocks, it is very important that you clearly understand what these stocks are and how you can invest wisely so that you can earn a lot of money through this simple investment.
How to know if one of these companies listed on the OTC Markets is reliable or, on the contrary, it is a company of dubious credibility. We are also going to break some myths about these actions and shed some light on this high-risk investment.
It is true that every great company begins as a small company. Even Apple and Google, before being one of the most valuable companies on the planet, in its day had a couple of workers. Every investor dreams of detecting a company that is starting, buying its shares at $0.10 and in 10 years trading at $600 per share.
Summary of Contents
What are Penny Stocks
For the Securities and Exchange Commission (SEC), a company with a low market capitalization is any company whose market capitalization is between 50 and 300 million dollars. The general description or sentiment about penny stocks is that it is a stock that is trading for less than $1. But this is not the true definition of a penny. They are trading stocks on the stock market, and the biggest difference you would see in the penny stocks and the blue-chip stocks is in the stock price. Penny’s shares simply share prices of smaller companies, small technology companies, mining companies, and start-ups. The price per share of these smaller companies is very low compared to multinational companies. Many people interested in stock trading invest their hard-earned money in these types of stocks.
Although the term “penny or penny share” applies to all companies that trade below 1 dollar, the truth is that the high risk of penny stocks does not come so much from their valuation but from their origin and situation. However, any company that trades below 1 dollar/euro will always have more risk and probably more volatility than the rest, but it does not have to be a penny stock. Therefore, the penny stocks with which they scam investors come from OTC Markets, and we will see why they have that high risk.
Type of Penny Stocks
In the OTC Markets, we would find 3 levels of penny shares, which, as with bonds, are classified according to the risk of the company. These three levels would be OTCQX, OTCQB and OTC Pink. We start with the highest risk.
Of the three levels, the OTC Pink (pink sheets) are the lowest quality and include companies in default or with serious liquidity and financing difficulties, as well as a large group of companies that do not yet have a single product on the market. That is, some of them do not have a business and are a simple project or laboratory study. They are companies that do not meet the requirements to list, they are not required to file reports with the SEC, and therefore, all information that investors receive is what the company itself publishes. These companies are not audited, so they could sell you shares in a company that has not had a commercial activity for more than 12 months.
They are at a medium level of risk. Like OTC pink, they don’t have the minimum financial standards for trading on a decent market. Although unlike OTC pink, these companies do have an obligation to file the appropriate documents and accounts with the SEC. Still, here we continue to find very small or early-stage companies, and no investor knows for sure whether they will eventually become profitable or eventually disappear.
These companies already enjoy more credibility within the risk that they continue to carry. At this level of actions we would already find companies that do meet many of the financial standards and for being, in a way, companies sponsored by other companies or large investors who are committed to the future of this company. Investors do have access to transparent and audited accounts from these companies.
JP Morgan and Deutsche Bank often “sponsor” many of these companies by acting as tutors and supporting them, which does not prevent many of them from ending up not taking off. However, the probability of success when investing in one of these companies, even though it is low, is much higher than choosing the previous two options.
Are there any benefits to investing in Penny Stocks?
Once you know what penny stocks are all about, the next question that comes to mind is the benefit you can get by investing a small amount of money in small business stocks. Well, the best thing about these small stocks is that if you experience a price movement, this movement will often be huge and dramatic in percentage terms. If you are looking to earn a good income through your investments then you must work the percentages and invest in penny stocks that have a good chance of earning percentages.
The best way to start investing
If you have a conversation with financial experts and stockbrokers, they will all guarantee that investing in penny stocks is the best way to enter the world of equity investing, for the sole purpose of learning. You will learn the tricks of trading stocks and shares by investing in penny stocks. They are the cheapest way to invest in stocks as you can even find certain stocks that are valued at 40 to 60 cents and you can even invest in hundreds or thousands of stocks without breaking the bank. You can also learn the nuances of stock trading through these small stock investments.
Never worry about cheap stocks
The idea that you are trading in cheap stocks should never surprise you when you are trading in stocks. These lower-value investments can change your life’s destiny in the shortest possible time since any of them can easily increase their value very soon. Since there are only a few traders who will invest in this type of stock due to its economic value, there is a possibility that it will double, triple or even increase four times its initial value in a space of a few hours, or even sometimes in a few minutes.
There s also a risk factor
If you can make big profits from penny stocks, the other side is that you could also lose all your money on a cheap stock you bet on. There is a risk involved in any type of investment, let alone in investments in pink leaf stocks. Therefore, if you are interested in trading these stocks securely, then you should rely heavily on analytical microanalysis analyzers. They are the perfect stock seekers who will be able to easily anticipate the behaviour of the stock market and their main target is just cheap stocks.
Invest with caution
Although penny stocks offer a large chunk of profit, these stocks are quite vulnerable to being manipulated. If you are not very careful and cautious in choosing the right stocks, you can easily lose all the money you have invested. It is important that you find honest and real small organizations to invest your money as such investments will offer you tons of potential to earn generously. If a company appears to have a bright future and is a promising small organization, then you can invest in your small stocks to get a substantial return on your investments. All you need to do is take the time to research the internet to spot such promising companies and you will surely get good payouts.
Tips for Investing in Penny Stocks
The following are the tips you can use when you are thinking about investing in penny stocks.
- Do extensive research and proper planning before investing in a company’s pink leaf stock.
- Get started with small investments and slowly increase your investments in penny stocks.
- Invest in companies that have a huge average business volume.
- Since penny stocks are very volatile, always have an entry and exit plan ready and always stick with that plan.
Best Penny Stocks to Buy Right Now
Enservco Corporation Common Stock
Volt Information Sciences, Inc. Common Stock
Houston American Energy Corporation Common Stock
22nd Century Group, Inc. Common Stock
Diamond Offshore Drilling
- Trading penny stocks will be your guide to learning about the stock markets and how they work.
- It is very easy to start trading penny stocks since you don’t need to make a big investment.
- You have the opportunity to earn more money in the shortest possible time by investing in mini stocks.
- These micro stocks can also grow to be traded on the stock market as mid-cap stocks, thus multiplying their value many times over.
How are penny stocks prices manipulated
Taking advantage of the lack of information and low levels of liquidity, many companies are dedicated to buying large amounts of shares of these companies at prices that are thrown to the ground, and subsequently, indiscriminately send emails to retail investors from a database. extensive, as well as telephoning investors to tell them that they have inside information and that the company is going to shoot up in the short term.
What they do is sell those shares 300 or 500 percent more expensive, executing the “inflate and knockdown” strategy, which is completely legal, since you have really only sold something that is yours to a buyer who has been willing to pay for it the price you have asked. The problem is that the buyer will not be able to sell his shares because there are no buyers unless he sells them 50 or 75 percent cheaper.