Ways2Capital : What are Penny Stocks?
Posted by Ways2Capital on August 13th, 2018
Penny Stocks are those shares which are available at very low prices in the stock market. Their name may have been called Penny Stocks and these stocks or the shares available at less than a dollar in the US are known as Penny Stock. Shares in trading in India at less than ten rupees can be called Penny Stocks. They are also called Chavanni Shares in Hindi.
These stocks are usually small companies whose capital is very low, there is no major turnover and most of these companies run in losses or run on very low profits. In such stocks, the promoters of the company or their representative are mostly engaged in trading. The prices of these shares are increased by printing false or true news. These stocks are traded in very small volumes and hence can say that these stocks have liquidity problems. Due to low cost, many times the investor gets stuck in these, but investing in such stocks at the behest of someone is risky.
Penny Stocks available at a very low cost, then the desire to invest in them remains in the investors. In the short term, the probability of price increases is also high. A share can give more returns in less time. For instance, if you buy a stock in two rupees and if the stock is also of three rupees, then understand that your investment increases fifty percent. But there is a lot of risk in such trading. Typically, when prices rise, the trader gets out of such stocks on the spot, but the prices come back and the investor gets restless. Sometimes there may be a turnaround share in Penny Stocks, Penny Stocks that means stocks that are going to profit from losses. If in fact you identify such a stock and invest it, it can prove to be a good investment too.
If a company whose previous history has been good and has gone in loss due to certain circumstances, but there is a demand in the market of the company's goods, large capital and good cell, the risk of investing is less. After taking a large loan several times, many companies go into losses with the burden of interest. The expansion of its products with the loan taken after some time seems likely to come back in the company's profits. The shares of such companies can be called turnaround shares.
If you are a new investor and are new players in the stock market then stay away from Penny Stocks or Penny Stocks. If you are an old and knowledgeable investor then invest only by identifying turnaround shares. Put only a small part of your total portfolio because these risks are very high.
Like a stock market tips in commodity, future and option an individual can also receive a recommendation in currency market. According to his individual risk appetite because, in currency derivative an individual can trade with the minimum investment as compare to the equity, commodity and its derivative.
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