Advantages of Trading Penny Stocks

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What is a penny stock and why are so many people talking about them? First of all a penny stock is being talked about so much because of all they have done to help investors portfolios. Something many people don’t understand is just how easy you can make money investing in penny stocks.

The biggest reason anybody ever trades in the stock market is just for the pure money to be made. How many people do you know that trade just for the sake of trading? Everybody wants to make money from the stock market and that is why penny stocks have become so popular these days. What most people don’t know about penny stocks is they aren’t really worth a penny and they are so volatile that you can easily turn a profit within a couple hours.

Penny stocks are considered any stock that is trading under $5 but some people think penny stocks are any stocks under $10. Whatever you want them to be they will be, just know that the lower a price of a stock is, the more you can buy, and the less the price has to move in order to make money. Don’t listen to others that have no idea about penny stocks and say they are a poor investment because they aren’t. The only poor investment is no investment at all.

There are many great advantages of trading penny stocks both for novice traders and the seasoned professional. Have you ever traded penny stocks and if so what was your initial reaction to them? What about now, do you still feel the same way you did when you first traded them?

Advantages of trading penny stocks

Cheaper – The first thing anybody will notice about penny stocks is the fact that they are cheaper than anything else. Most people will stay away from penny stocks because of this but I see it as a good thing, you can buy more for less money. Another reason it is an advantage to buy cheaper stocks is the fact that you can easily tell where is the low and the high because decent stocks will only fluctuate so much before taking off one way or the other.

More volatile – Penny stocks are very volatile which for a trader that is always watching the market is very good news. The more volatile a stock is the more you can make off each trader each day. Don’t think that volatility is bad because it is only bad if you buy at the high and sell at the low, not the other way around.

Could be next Starbucks – If you know anything about stocks then you know how many people though Startbucks was going to be a dud early on and they proved almost everybody wrong. Do you know what would have happened if you spent a mere $10,000 on Starbucks stock when they first came onto the public market? You would be a multi millionaire now and that is only with the share price, not to mention the dividends each year.

Still great companies –  The last thing is that penny stocks are often still great companies. There are many stocks out there that are trading well below the $5 mark but I would never consider them bad companies are run by terrible leaders, they are just hitting rough spots in the road and need time to rebound. Always give a company a chance and you will see what they can do when they are being supported.

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