According to Investopedia Inc. the penny stock market has seen phenomenal growth this past decade. From '94 to '03, the Over-the-Counter Bulletin Board trading volume increased an astounding 8900%, equaling a total of 63% of the NASDAQ and 78& of the NYSE share volumes. Many an investor has succumbed to their siren song.
It isn't hard to see why. Penny stocks are usually traded in lots of 1,000 and, as the name suggests, are bought (and sold) at incredibly low prices. There is no official price cut-off, and differences of opinion range from shares trading under $1.00 all the way up to $5.00. Others distinguish according to the market that they are traded on (the OTCBB, OTC or "Pink Sheets" for example). Yet others designate stocks as penny stocks based upon their market capitalization, or the value of each stock multiplied by the total number of outstanding shares. Regardless of the specifics, a general rule applies to all penny stocks ? they are a very high risk investment. Inversely, there's also the potential for staggering rewards.
But for every pot of gold at the end of the rainbow, there are thousands of cliffs and pitfalls along the way. The risks and dangers of penny stocks are many. In the stock exchange, there is a "best price" priority given to orders of a higher price than yours if you're buying or a lower price if you're selling. Combining this priority with what is very often low volume trading means there will be times when you find that your orders cannot be filled. In addition, there will be instances where you will have to settle for partial order fulfillment. And these are just dangers faced when your stock is performing well.
Penny stocks come from companies that are often less than credible, and unlike some of their more expensive cousins, can find themselves swayed by the power of rumors. Press releases, news stories, widespread whispers and even online forums and chat-rooms can be responsible for dramatically influencing their performance. This volatility creates two considerable challenges: 1) a high potential for schemes and scam artists; and 2) the inability to use traditional stock charting methods with any real effectiveness. It goes without saying that this isn't a market for the faint of heart.
Jennifer Gibbs is a successful freelance writer who lives in South Georgia with her husband and son. Be sure to check out her website for more great content, or to request a bid for your writing needs. http://www.jennifergibbs.com
Chicago limo Skokie ..I am sure that if you have a brokerage account... Read More
There can't be many traders who haven't at least considered... Read More
Did you run out to buy that duct tape yet?... Read More
What is leverage?Here is a definition of leverage from an... Read More
The stock market has been going up for more than... Read More
Dollar cost averaging is one of the most popular ideas... Read More
Financial markets provide their participants with the most favorable conditions... Read More
There is a famous cliff on the ocean in Acapulco... Read More
Economists know more about how the fragments of society work... Read More
Unfortunately, most of you who are reading my column are... Read More
Ever jumped out of an airplane? It's OK if you... Read More
The fight continues to rage among traders who use technical... Read More
The bulls and bears of the stock market are both... Read More
Today we are inundated with tons of information about the... Read More
For years investors have been taught to look into the... Read More
A PEG ratio cannot be used alone but is a... Read More
"If you don't know where you are going, any road... Read More
The stock market has been in an up trend for... Read More
In today's volatile and confusing stock markets everyone is searching... Read More
What does it mean to short a stock?This means that... Read More
I have watched my cat play with a bag of... Read More
Just 30 years ago the stock market was a shadow... Read More
As a novice trader, you'll often feel the need to... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
If you are serious about making and keeping money by... Read More
limo O'Hare Bonfield ..There is a current movie entitled "Eternal Sunshine of the... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
This is a guide to the different types of mutual... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
How many times have you said to yourself, "I'd like... Read More
We keep hearing about this bear market and that the... Read More
Well, not really. What I mean is I don't mind... Read More
In my opinion, due to the volatility of stock market... Read More
Economists know more about how the fragments of society work... Read More
I have watched my cat play with a bag of... Read More
What is the Series 7 Exam? If you... Read More
Any online investor / trader seeks an excellent off or... Read More
Everyone who follows the financial news has heard of mutual... Read More
After the publication of the first part of this two... Read More
People are always asking me when should I sell my... Read More
In today's volatile and confusing stock markets everyone is searching... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
To begin, you might look at playing the stock market... Read More
Now that you have some money burning a hole in... Read More
The ABC's of Stock Trading SuccessStock trading success...why is it... Read More
In a previously written article, we expanded the use of... Read More
I feel that an investment strategy in the stock market... Read More
When the stock market is going up and all your... Read More
Spread trading is a technique that can be used to... Read More
Its dinnertime and the phone rings. It's Joe Noname with... Read More
Stocks & Mutual Fund |