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Buying And Selling Penny Stocks

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The Possible Gains in Buying and Selling Penny Stocks

selling penny stocks

You will hear plenty about buying and selling penny stocksjust by browsing the Internet. Even if you are not trying to learn about stocks, you will probably run into ads regarding their incredible financial potential. There is a simple, mathematical reason for the penny stock craze. Even investors who do not deign to trade in these low-priced stocks will admit that it is possible to make unbelievable amounts of money from just one investment in a penny stock. If you buy a stock that is presently valued at fifty cents and it gets just a twenty-five cent bump in price, then you will have the possibility of selling penny stocks for a fifty percent return. This can happen in just a few minutes of one day.

The Potential Risks in Buying and Selling Penny Stocks

If it were just that simple then everyone would be a penny stock day trader. However, as many investors will tell you, there is a lot of danger in buying and selling penny stocks. These extremely low-priced shares in small companies do not have a tendency to climb out of the penny stock basement. The ones that do are very rare. Instead, many penny stock traders make their money from the tiny price spikes that may last only a few minutes. Then they sell the stock and take their profits. Often, the penny stock they sold returns to its previous price or even lower.

There is an even worse possibility. You might sink your money into a penny stock and watch the price plummet to less than a penny per share in just a few minutes. Then you might discover that it is easy to buy penny stocks but selling penny stocks is much more difficult.

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