Wednesday, 11 July 2012
Playing Penny Stocks (Chan dumps Ariantec and Metronic shares.)
Playing Penny Stocks
At first glance, penny stocks seem like a great idea. With as little as $100, you can get a lot more shares in a penny stock than a blue chip that might cost $50 a share. And, if the two blue chip shares you bought went up $1 you'd only make $2, whereas if 100 shares of a $1 stock went up a $1 you would double your money.
Unfortunately, what penny stocks offer in position size and potential profitability has to measure against the volatility that they face.
Penny stocks can shoot up. It happens all the time - but they can also crash in moments, and are exceptionally vulnerable to manipulation and illiquidity.
Getting solid information on penny stocks can also be difficult, making them a poor choice for an investor who is still learning.