When you start out as a new trader, for some reason, you’re drawn to the world of trading pennystocks. On surface, it makes sense why folks are more inclined to trade these securities.
After all, trading at $5 dollars or less, buying penny stocks offers you the ability to buy large quantities of a stock. New traders mistakenly believe it’s wiser to buy 10,000 shares of a stock that cost (.25 cents) than 100 shares of a stock that cost $25 dollars. This thinking, while it comes off wise to new (and some seasoned) traders is inherently flawed and a recipe for disaster. Traders who trade pennystocks should know a few things about pennystocks and I feel; I am the person to tell them.
Pennystocks are considered “pennystocks” for a reason. They hold little to NO value and are EXTREMELY risky.
If you look closely, you’ll realize that many penny stock companies are failing financially, in huge debt, facing delisting or are already delisted (banned) from trading on regular exchanges.
Pennystocks are easier to manipulate and are often involved in pump and dump schemes.
Institutional investors are not allowed to purchase pennystocks because of their low quality and inherently risky nature.
Given all the listed above, I am not sure why new traders believe pennystocks will lead them down the road to riches.
The takeaway of this blog is, save your money and yourself the headaches; avoid trading penny stocks. Sign-up for our premium package here and I will show you how to make money without the headaches and substantial loss of capital associated with trading penny stocks.
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