What is the penny Stocks for dummies ?
It is always a good idea to look back at the first time of everything. If you are not the first timers in penny stock, looking back again at the ground can make you understand better or even you could revise some of the steps you have made for a better result. Just because you read this does not mean you are a dummy and this has to be made clear since information is the fundamental needs in penny stock investment. Those who are interested in buying penny stocks should understand well how the mechanism works and do some personal research prior to the buying action.Definitions of Penny Stocks for Dummies
Let us start with how penny stocks are defined. A penny stock is defined as a company’s share that is lower than $5.00 for each share. Others define penny stocks as public company’s common shares that trade for pennies or as small as $1.00 per share. The other definitions commonly take the market value as the basis. In short, the market value means the number of shares which are multiplied by each share’s price. In general, penny stocks are those that have a market value of lower than $200 million or within this variation.The Risks
For sure, penny stocks have higher risk than the other common stocks, with the reasoning that the company’s low value causes the prices to be manipulated easily by well-off personalities. The premise can be illustrated as follows; a person cannot easily manipulate a company that has a capital of one hundred billion dollars. However, various individuals or small groups of traders can trade twenty percent of the entire capital from a company that has a capital of fifty million dollars. The company value on the short term can be manipulated by the surges in activities of selling and buying which makes new investors and traders change their decision in activities of selling and buying. This is the type of practice that may seem to be illegal or even worse, many people would think of it as fraud.The Trade
Many experienced stock traders suggest that you should do well with trading in short term rather than that in long term, like years of stock holding. The reason behind this is because the length of time you spend for trading makes the risk applied to you become greater with scammers who come in or with companies that get their negative information published.When you invest in penny stocks, it is best if you can get good information that no other traders get. You can generally get this by conversing with those who work for the small companies from whom you can consider the true viability of the company. Traders who have strong willingness to go further than what is available on the web, in search of this kind of information, can truly get big gains in penny stock investment. Nonetheless, the two traditional methods of analyses i.e. financial and stock charts are of course not to be annihilated since they can also help prevent the profitable penny stocks from failing.
That's a little review of penny stocks for dummies, hopefully with this explanation may provide benefit to the reader especially to seekers penny stocks .
