Penny stocks pros and cons : In today’s Blog, I’m going to share with you the pros and cons of penny stocks. Penny stocks are hugely attractive, and they are great for certain types of traders. But they’re horrible for other types of traders. In this episode, we’ll cover the advantages and disadvantages, so that way you can make a rational decision to see if penny stocks are right for you. We’ll talk about things such as their low price, manipulation, getting delisted, regulation issues, risks and more. There are some pros and cons for penny stocks.
Pros
Big Winners of Tomorrow :
Some companies trading for pennies are present at large number. They will prove management team rock-solid financial positions by improving the disruptive products and financial ratios that are set to dominate industry.
Excitement
It is present for the people who made 5% on an investment in a year. The excitement comes with the big gain and loss among penny stocks.
Turning Small Investment : Majority of penny stock investors have small amount to start the trading. If a person has $500 trade then he can buy three shares of a big company but purchase thousands of shares of the low price that are interested.
Investor invests in the penny stock at low price of stock. The price is low as counted in pennie.They doesn’t require a huge investment. They are favorable for the investor and available at a limited budget. The investor will buy a number of penny stocks as compared to other stocks within a limited amount of money. They will help investors with large interests in a company.
Higher Return on Investment : The penny stock has less demand investment as prices are low. The growth and progress of a company has an impact on the stock prices. They will move and help the investor to make good money on less investment.
Less number of investorsSo low-cost investor can make the purchase of the penny stock at anytime and find the stock of any company available for purchase.
Short term liquidity : They are short-term financial investment that is a good option for maintaining a diverse portfolio. The investments are of long-term nature. Also increase the liquidity of the investor as the stock can be traded anytime.
Cons
Low quality Companies are there : It is because their financial position to train wreck balance sheets is frightening. The operations will produce large losses. They have a questionable product in a dying industry with many competitors.
Risky Markets : Trade on the New York Stock Exchange, American Stock Exchange, and NASDAQ means all the companies have listing standards, reporting requirements, and investor communication obligations.
Volatility : The rapid and significant price goes great when they go in your favor. But there is another side of the coin to the volatility coin. Pump and Dumps have a low-price thin traded nature of penny .
High Volatility : They are known for the risky nature and uncertainty of return. Since the penny stocks are low as the amount of investment in the penny stocks is less. This is due to high volatility. Low liquidity has a limited information sharing, and risk of manipulation that makes it less favorable for the investors to invest in penny stocks.
