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Penny Stocks Guide
Straight answers to your questions about Penny Stocks

INTRODUCTION:
Home
About Us
About Penny Stocks
Benefits of Penny Stocks
Getting Started
RISKS:
Protect Yourself
The Biggest Risk
Other Risks
The Worst Penny Stocks
Dangers
DUE DILIGENCE:
Best Penny Stocks
Finding Good Investments
Resources
Stock Brokers
Learning
FAQs
FAST FACT:
Many new investors get started trading with penny stocks, because they have less to invest, and want to take a chance on landing a big gain.

There are risks associated with trading penny stocks. In many cases these risks can be mitigated or avoided altogether, but there is always a chance that your investment will lose money rather than make money. It’s important to understand the risks associated with your trading strategy, so read this page carefully.

What are the Risks?

The Single Biggest Risk for Penny Stock Traders:

The biggest risk doesn’t have anything to do with a lack of predictability in prices or market volatility. Those are risks that you will face no matter what type of stocks you are trading and regardless of what type of trading strategy you are utilizing.

The biggest risk in penny stocks is the risk that you will actually be duped by someone who is manipulating the market. How can this be done? We call this the pump and dump scheme and it is probably the biggest risk that stock traders face. This takes place when someone heavily promotes a particular stock with the purpose of driving the price up so that they can sell their own shares for a profit.

In order to mitigate this risk...

  • Never buy stocks you heard about through an unsolicited e-mail or phone call...
  • Never buy picks from a FREE newsletter...

Dangerous sources of free stock picks include free newsletters, the rumor mill, e-mail spam, chat rooms, promotional web sites, and fax services. In each case, the publisher either has a vested interest in the shares, or is getting paid by the company to produce propaganda.

1. Make sure they have a phone number. (And a real one, not just a number that calls to nowhere!)

2. Make sure they offer a free trial. All the best services do, and all the worst ones don't.

3. Ask if they've had any media coverage.

By following these three indicators, you can weed out all the poor services and migrate towards the better ones.

What are some of the other risk factors?

Most of the other trading risk factors are the same type of factors that apply to all stock trading positions. First, there is the simple unpredictableness of a stock’s future. This is a risk that must be considered with any company stock.

There are also other risks, such as low visibility or low tradeability. Be sure to read more about these other risks before you begin trading.

Protect Yourself!

Here at the Penny Stocks Guide you can learn all about how to protect yourself from penny stock trading risks. Trading penny stocks can be the most exciting and rewarding type of investing around, and if you take the time to do it right, it will pay off for years and years.

The Worst Penny Stocks and Riskiest Penny Stocks to Trade?

Learn all about the worst penny stocks, and some tips on how to avoid them.

Why do some people think that Penny Stocks are a dangerous high-risk investment?

Penny stocks have gotten a bad name in the last few years. This is largely because scammers use thinly traded shares to take advantage of people with pump and dump schemes, and by providing manipulative information.

They also get a bad name because many investors lose money while trading them, because they don't understand what they’re investing in, or how to trade profitably.

Many people trade penny stocks before they learn about the easily avoidable dangers, and then complain that penny stocks are dangerous.

However, for those investors who do learn how to find good quality companies and take the time to understand the dangers and how to avoid them, there are tremendous profits to be made. Some penny stocks are capable of growing x,xxx% which is a return that would be very difficult to achieve while trading shares of Microsoft or General Electric.

The Single Biggest Risk for Penny Stock Traders

By far, the biggest danger to penny stock investors is free stock picks. They come by phone, through e-mail spam, and even by fax. In many cases, a carefully crafted and fostered 'rumor mill' alerts you to a penny stock through a friend who knows a friend of a guy...

  • Never buy stocks you heard about through an unsolicited e-mail or phone call...
  • Never buy picks from a FREE newsletter...

In most cases, the penny stock company is paying people to promote their stock. They mislead you as to the prospects and potential of the company. If they were so good, why would they need to pay for investor awareness?

Dangerous sources of free stock picks include free newsletters, the rumor mill, e-mail spam, chat rooms, promotional web sites, and fax services. In each case, the publisher either has a vested interest in the shares, or is getting paid by the company to produce propaganda.

Generally speaking, the more you pay for a newsletter, the more likely you will get quality picks. The better services are able to charge a premium, because they attract clients through renewals and word of mouth referrals. As well, more expensive services generally put more into research and follow-up.

Did You Know?

There are a few things you can do to make sure you get involved with a good service for penny stock picks.

1. Make sure they have a phone number. (And a real one, not just a number that calls to nowhere!)

2. Make sure they offer a free trial. All the best services do, and all the worst ones don't.

3. Ask if they've had any media coverage.

By following these three indicators, you can weed out all the poor services and migrate towards the better ones.

Click here to see penny stock picks from the authority!