Penny Stocks can be very risky indeed. The SEC warns investors about shady dealings in this sub market all the time.
"Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them. Moreover, because it may be difficult to find quotations for certain penny stocks, they may be difficult, or even impossible, to accurately price. For these, and other reasons, penny stocks are generally considered speculative investments. Consequently, investors in penny stocks should be prepared for the possibility that they may lose their whole investment (or an amount in excess of their investment if they purchased penny stocks on margin)."
The thing is, you can lose your shirt for sure with these investment vehicles. Companies such as these need to lots of operating capital and they rely on their stock to get it much of the time. This means that investors in these stock could potentially be diluted, which is like inflation of the dollar. Your stock soon becomes worth less and less as the price keeps dropping as more stock hits the secondary markets.
However, there is a handful that have made it out of these trenches to trade on the Nasdaq or better, this is referred to as uplisting and it is a penny stocks traders dream. If you are an experienced daytrader, then you are most likely already familiar with what this type of news could do to low priced stock.
Again, you must be aware of this and take many precautions before looking into trading these seemingly gold mine stocks and hidden gems. They can be very hard to find, and you could lose all your money before you do find one.
"Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them. Moreover, because it may be difficult to find quotations for certain penny stocks, they may be difficult, or even impossible, to accurately price. For these, and other reasons, penny stocks are generally considered speculative investments. Consequently, investors in penny stocks should be prepared for the possibility that they may lose their whole investment (or an amount in excess of their investment if they purchased penny stocks on margin)."
The thing is, you can lose your shirt for sure with these investment vehicles. Companies such as these need to lots of operating capital and they rely on their stock to get it much of the time. This means that investors in these stock could potentially be diluted, which is like inflation of the dollar. Your stock soon becomes worth less and less as the price keeps dropping as more stock hits the secondary markets.
However, there is a handful that have made it out of these trenches to trade on the Nasdaq or better, this is referred to as uplisting and it is a penny stocks traders dream. If you are an experienced daytrader, then you are most likely already familiar with what this type of news could do to low priced stock.
Again, you must be aware of this and take many precautions before looking into trading these seemingly gold mine stocks and hidden gems. They can be very hard to find, and you could lose all your money before you do find one.