A penny stock is often viewed as the black sheep of the equities markets.  Passed over by many as a worthless investment, penny stocks have the ability to make or break certain investors.  As a highly speculative and volatile investment, it's easy to become overwhelmed by the potential for major profits and losses.  By keeping a straight head and learning the right way to trade a penny stock, you have the ability to gain profits you've never thought possible.


A penny stock typically refers to a stock that trades at a relatively low price and market capitalization, usually outside of the major market exchanges.  They are usually considered high-risk investments due to their lack of liquidity.  Though this is a broad definition, it encompasses the general school of thought behind a penny stock.


It’s best to get a good idea of the type of investments you're considering trading before you jump in.  After all, you need to crawl before you walk.  Here are a few key points to remember when trading penny stocks:

 

  • Penny stock is a general term, not a specific definition.  Not all penny stock sells for one cent apiece.  Some investors consider anything under $5 a penny stock, while others consider anything traded off the major market exchanges as a penny stock.
  • A penny stock will often trade over-the-counter.
  • A good penny stock has consistent heavy volume. Volatility in the volume of shares traded is not a good thing.  The more consistent and heavy the volume, the more consistent the price movement will be.
  • Money management is crucial when trading penny stocks.  Having a consistent and established trade plan will help you stay on the track to success.

 

 

 

 

 

 



 

 

Thinking of trading penny stocks?  Build
a good knowledge base before you
place that first trade.

 


Wizetrade TV is a TV network dedicated to providing you with coverage of all  the major markets from opening bell to closing bell and beyond in an interactive format.  Now you can watch 11 hours of live-in-the-market trade analysis streamed right to your PC in High Definition every weekday. Call or e-mail in your trades to be analyzed by the experts. Start your free subscription to Wizetrade TV today.


 


We've specialized in creating confident, new investors for a decade. With over 130,000 customers since 1999, Wizetrade® is the source for learning how to trade. We receive unsolicited testimonials every day from Wizetrade users that are making money. Read their success stories below.

 


These are just a few of the things that Wizetrade® can help to teach you as you begin your journey toward becoming a successful penny stock trader.   

 

 


Before you jump into the world of penny stock trading, you must first decide if this type of investment is in line with your personal trading philosophy.  As with any investment, you must decide what your risk tolerance is when considering trading penny stocks.  Not all investments are right for all people.  One of the great things about the stock market is that it offers a myriad of investment opportunities to fit your lifestyle and objectives.  Wizetrade has been helping people define their trading goals and objectives for almost a decade.


Here are some of the main differences between penny stocks and larger-valued blue chip stocks.

Speculation

Little speculation. The company in question has an established reputation and ample information.
Highly speculative.  Little information is readily available to investors.  Pricing is often based on speculation.
Predictability

Very predictable.  Little or no potential for a major price swing.
Highly unpredictable.  Often has major price swings in any given trading day.
Volatility

Typically low volatility levels.  Price swings usually correspond with the general market, as well as any company-related news.
Highly volatile.  Subject to major price swings and returns of hundreds of percents.
Returns

Smaller but steady returns.  Average returns range from 10-20% in any given year.
Potential for major returns.  Returns are often over 100-200%, potentially in 1 trading day.
Volume

High volume on any trading day.  Bid and ask spreads are relatively close, and there is enough volume to accommodate any buyer or seller.
Lower and variable volume.  Bid and ask spreads can be farther apart, due to a lack of buyers or sellers.

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After hearing about all the reasons why a penny stock can be a risky investment, you're probably asking yourself, "Why would anyone want to invest in these shares?" However, when approached logically and methodically, investing in a penny stock can be a very lucrative option requiring minimal capital.  Some of the reasons people choose penny stock investments include:

Penny stocks offer a specialized alternative to the traditional stock market, providing investors with the ability to reap substantial profits. Wizetrade's powerfully simple trading software can help you recognize the next big breakout trades.  From penny stocks and beyond, Wizetrade can be a key to your success.

 

 

 

 

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