What are penny stocks and how they can make you rich

What are Penny Stocks and How they Can Make You Rich

It becomes increasingly hard to check the emails without hearing about the best penny stocks that is going to make you rich. But, what really are penny stocks and how it can deliver with its promises?

Here is the reason why your 2 cents is worth on penny stocks.

What is a penny stock?

It is a small-cap, low-priced stocks that are known as penny stocks. Contrary to its name, penny stocks seldom cost a penny. The SEC considers penny stock to be anything that is under $5. Even though there are under $5 stocks trading with big exchanges like NASDAQ and NY SE, most of the investors do not think of any of this when describing a penny stock.

However, there are individual investors that are looking at penny stocks such as Wall Street's Wild West.It is considered as the untamed world of investing that is detached from all the glitz and media coverage compared to the other investment choices. If compared to the stocks that are traded on major exchanges, penny stocks provide with impressive losses and gains that are not often heard anywhere else.

How to become an investor of penny stocks?

Just like any other stocks that are available in the market and the one that you will buy, you can purchase the shares of the best penny stocks through a normal stockbroker. You can buy off a share whether it is listed or not on major exchange. Keep in mind that when you are buying a share of penny stocks, make sure that you are buying from a legitimate source.

Just because it lacks the glam that Wall Street has does not mean that there are no dramas that are included with it. There are still some scammers and corruptions that linger and waited for someone to victimize.

With the many risks that are involved in penny stocks, why would someone risk his money in penny stocks? This is due to the volatility of the investment. Thanks to the volatility or its proneness to violent fluctuation, many people believe that their $.08 investment will jump to $8 in just two weeks. And believe it or not, it actually happened. There are many success stories that you can find where penny stock investors have become rich.

The bottom line of this is that penny stock may be risky to invest and are vulnerable to scammers.

However, it can still make you a lot of money if you have played right.

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