The charm of penny stocks is simple

They cost less and guarantee great returns. But trading them can also make you lose money. For Traders who can't afford shares of big companies, the potential returns from exchanges these stocks are too great to decline. With a moderately small investment, you can make a pleasant return if the exchange works out. Indeed, even with the reasonable risks of losing money, a few people insist on exchanging the pennies. In this way, if you end up receiving a phone call from a penny-stock promoter, or you notice an advert that guarantees dollars from your pennies — and you still decide that perhaps penny stocks aren't wooden nickels, simply remember these rules:

1. Disregard tips and read the disclaimers Penny stocks are sold more than purchased — for the most part through tips that come your way in messages and bulletins. The free penny-stock bulletins do not give you tips out of the goodness of their heart. If you read disclaimers at the newsletters bottom, they are rewarded to place a stock on the grounds that their traders need an exposure to the organization. There is nothing amiss with wanting exposure, yet all penny newsletters make false guarantees about their crappy organizations.

2. Sell quickly A charming thing about penny stocks is that you can make 20% or 30% in a couple of days. In the event that you make that sort of return, sell quickly. Shockingly, several investors get greedy, going for a super high return. Considering that the penny stock you're in may get pumped up, take any return and proceed.
3.Try not to sell short In spite of the fact that pumped-up penny stocks shorting may appear to be alluring, don't do it Penny stocks are excessively unstable, and in case you found yourself on the unexpected side of the exchange, you could easily lose half or more on a short squeeze. Another issue is that it's hard to find shares of the penny stock to short, particularly those that made immense moves in light of bulletins tips.

4. Concentrate just on penny stocks with high volume Stay with stocks that exchange no less than 100,000 shares every day. If you exchange stocks with low volume, it could be hard to get out of your position. You should know about the number of shares exchanged and the dollar volume. You should exchange penny stocks that are valued at more than 50 pennies per share. Stocks that are exchanging under 100,000 shares per day and are under 50 pennies per share are not sufficiently liquid to be in play.

5. Don't fall in love with a stock Each penny stock company wants you to think it has an energizing story that will change the world. If you enter in the penny stock field, be critical, do your own particular research, and differentiate, even if a companion or relative is recommending a stock. Penny stocks have bad reputation, so be careful.

Conclusion
Even if a stock has an incredible price, and if it seems like 25 pennies per share should be easy to double or triple your investment, be calm and cautious. Do your research. You won't get rich by investing all your time and energy looking for penny stocks to purchase, however, you can earn good money by adhering to value investing to find great stocks at great prices, not risky ones at cheap prices Learn more from this website