Why Penny Stocks?
Penny stocks are equities that, by definition, trade under $5.00 per share.
And they have special qualities that traders seek.
One of the most common answers that people give when asked why they trade in the micro-cap and small-cap arena is:
(1) These stocks could provide robust returns that are hard to find in other markets. There is a well documented history regarding how fast shares of lower-priced public companies have surged in value and posted significant gains. And we've seen it firsthand. So it should be of no surprise that there's been a truck load of individuals that seek out these high flyers. With the reward of high returns comes a risk of downside potential. But the downside risk could be reduced based upon many variables such as trading as base levels; high demand coupled with a smaller float; an uptrending chart, and; positive fundamental and technical indicators, just to name a few.
(2) Micro-cap and small-cap companies typically take less dollar volume to witness a major increase compared to their higher priced counterparts. For example, when was the last time a Fortune 500 Company trading on the NYSE shot up 100% in the short term? On the other hand, scores of low priced stocks have bounced from 20 cents to 40 cents in a matter of days. One reason we see this is because lower priced companies don't often require many millions of dollars in volume to push their valuations to significantly higher levels and display substantial percentage gains. That being said, when applying the theories of basic economics in certain market conditions, when the demand for something increases there is typically a corresponding increase in price. And in this arena, the increase is often well above average in the near term.
Now, lower priced stocks could generate excellent gains or unfortunate losses. These vehicles are speculative by nature which is why they are can be volatile.
But with the right situations, people have dramatically increased the number of profitable trades and made a wealth of profits by following time tested principles. And we aim to utilize these principles which assist subscribers by getting into the best situation and provide excellent opportunities to maximize gains.
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