Is trading penny stocks every day a good way to invest your money? Many people are afraid of this, and they have good reason to be. Many investors have made a lot of money with penny stocks, but you don't often hear about the thousands of investors who have lost a lot of money in the process.
Penny stocks are known for letting you make or lose a lot of money very quickly. People often hear about someone who made a million dollars in a few days by day trading penny stocks. This makes them so excited that they don't realise that these investors (really gamblers) usually lose all that money soon after.
Even if you don't believe it, penny stocks are nothing but a fancy way to gamble. Yes, this is a way for some investors to make a lot of money, but only if they know exactly what they are doing. The reason for their volatility is simple: each of these companies with less than $1 per share has a reason for being in this situation.
Most of the time, it was either bad management, bad economics, or both. Before putting your money down, you should have a good reason to think that things are about to change.
Penny stock day trading is risky because it doesn't take much to change your investment. For example, if you buy a stock for.25 cents and it goes up to.50 cents, you've just doubled your money with a.25 cent gain! Of course, there are the same risks if it goes down.
For most stocks, a.25 cent change wouldn't be very noticeable. However, for penny stocks, a.25 cent change can be either very profitable or very bad. So, if you want to get into the exciting, never-ending world of penny stocks, you need to be an expert at looking at a company and figuring out if it has a chance to turn around.
Think about this: Most of the best investors in the world got to where they are now by buying good stocks that have made money for a long time. When you buy penny stocks, you take yourself out of that world and only look at companies that have already shown they can't make money. Yes, miracles and turns of events do happen sometimes, but not very often.
If you want to get into day trading penny stocks, you need to become an expert at finding companies that you are sure will turn things around and jump in at the right time. No, it's not impossible to make money with penny stocks. You just have to know what you're doing and keep a close eye on your investments at all times.
