A Penny for Your Stocks

According to Investopedia Inc. the penny stock market have seen phenomenal growing this past decade. From ’94 to ’03, the Over-the-Counter Bulletin Board trading volume increased an dumbfounding 8900%, equaling a sum of 63% of the NASDAQ and 78& of the New York Stock Exchange share volumes. Many an investor have succumbed to their Siren song.

It isn’t hard to see why. Penny pillory are usually traded in tons of 1,000 and, as the name suggests, are bought (and sold) at incredibly low prices. There is no functionary terms cut-off, and differences of sentiment range from shares trading under $1.00 all the manner up to $5.00. Others separate according to the market that they are traded on (the OTCBB, OTC or “Pink Sheets” for example). Yet others designate pillory as penny pillory based upon their market capitalization, or the value of each stock multiplied by the sum number of outstanding shares. Regardless of the specifics, a general regulation uses to all penny pillory – they are a very high hazard investment. Inversely, there’s also the possible for staggering rewards.

But for every pot of gold at the end of the rainbow, there are thousands of drops and pitfalls along the way. The hazards and dangers of penny pillory are many. In the stock exchange, there is a “best price” precedence given to orders of a higher terms than yours if you’re purchasing or a lower terms if you’re selling. Combining this precedence with what is very often low volume trading intends there will be modern times when you happen that your orders cannot be filled. In addition, there will be cases where you will have got to settle down for partial order fulfillment. And these are just dangers faced when your stock is performing well.

Penny pillory come up from companies that are often less than credible, and unlike some of their more than expensive cousins, can happen themselves swayed by the powerfulness of rumors. Press releases, intelligence stories, widespread whisperings and even online forums and chat-rooms can be responsible for dramatically influencing their performance. This volatility makes two considerable challenges: 1) a high potentiality for strategies and cozenage artists; and 2) the inability to utilize traditional stock charting methods with any existent effectiveness. It travels without saying that this isn’t A market for the faint of heart.