HOW TO AVOID THE PITFALLS OF TRADING PENNY STOCKS

Making money in penny stocks is not guaranteed although there is a good chance that you will be able to if you learn the ropes. Trading penny stocks can be very profitable but it can also be disaster depending on the outcome of your shares. It takes a lot of wits, courage and determination to hit it big with stocks but you will also be better off if you are not thrown to the hungry wolves with enough knowledge to arm you. Some of the questions which beginners ask is where can I buy penny stocks and many more. Hopefully, his will answer all of them.

To avoid pitfalls, never buy penny stocks which are hyped or endorsed through unsolicited emails or phone calls, just like you wouldn’t buy investment property over the phone or through an email. This information is not reliable. Most of the time this information is sent by scammers who have one goal in mind, to make easy money by fooling people. What you should do instead is to research on a company which you are interested in. find out everything you can about it, their history, their current financial standing and the people managing it.

Be cautious when dealing with penny stocks with shares for less than a penny. It is often an indication that the company is about to go bankrupt. So, be very careful about them.

Be careful about brokerage firms which overcharge their customers. Brokers make their money on the markup price on penny stocks which they deal for you. So, check everything before you say yes to a deal.

Be very careful about oink sheets, they may not have any value at all. Penny stocks come in low volumes unlike other major stock markets. It is possible to not be able to sell penny stocks because no one wants to buy them. So, you will have to be prepared for this instance in case it happens.

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