How to trade Penny Stoks?

[Trevor Neal]

Hi, I would like to learn how to trade Penny stocks, can you explain it to me please?

[Michael97]

Hello Trevor, thank you for asking!

Penny stocks or small-cap stocks are shares that are provided by small companies, and usually, their value is less than $1 per share.

Characteristics of Penny stocks are that these stocks can be bought in large quantities for a small amount of money. But because investors usually buy large amounts of these stocks, this makes them volatile. When volatility is high, there is a higher risk of stock’s price fluctuating, when volatility is lower, thus stock is safer and more stable, which makes it more favorable for buying.

Also what often accompanies Penny stock trading is a lack of information, which leaves it very susceptible to fraudulence, this type of stock trading is one that is most exploited and manipulated by con-artists. Another disadvantage is the low liquidity of this type of stock, since people buy large amounts for a small amount of money and there are not many interested in buying them from a second-hand source.

So when engaging in Penny stocks trading it is recommended to be very cautious, knowledgeable, and be vary of any kind of stock that is unchecked and of suspicious origin.