PENNY STOCKS FOR BEGINNERS ? Basics Of Investing In Penny Stocks

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This penny stocks for beginners video talks about what a penny stock actually is. Beginners in the stock market should take caution investing in penny stocks for a number of reasons. Penny stocks are not a good investment for beginners and many videos out there do not explain penny stocks well. Unfortunately, many people push penny stocks on new investors. Since they trade for such a low price, many investors think they are a steal.

This video explains penny stocks for a complete beginner. First of all, the basic characteristics of penny stocks. These stocks generally trade outside of the major stock exchanges, they have a small market capitalization and a low price. Many people assume by the name that penny stocks are stocks that trade for under one dollar per share. In fact, the SEC defines a penny stock as a stock that trades under five dollars a share.

Are penny stocks for beginners? Absolutely not. Penny stocks are for investors with a very high tolerance for risk. Penny stocks are appealing to investors due to the explosive growth potential they have, but the truth is there are far more horror stories than success stories.

Why are penny stocks a risky investment?

1. Lack of public information.

Many of the penny stocks represent companies that are not required to file with the SEC. As a result, these companies are not regulated and it is extremely difficult to find credible information on them.

2. No basic standards.

OTCBB and Pink Sheet stocks do not have to fulfill certain standards to remain on the exchange. Listed stocks have to meet certain standards or they are delisted.

3. History.

Often times, these are newly formed companies with no history. Even worse, other times they are companies with a bad track record nearing bankruptcy.

4. Liquidity.

This is one of the biggest problems with penny stocks; low liquidity in the market. The first problem is that it may be difficult to find a buyer when you are looking to sell. The second problem is that traders can manipulate the stock price.

All in all, penny stocks are not a suitable investment for new stock market traders. I do not recommend penny stocks for beginners and I have never traded them myself due to the risks associated with them. If you are a stock market beginner, do your research and look into low risk investments to get your feet wet. Avoid penny stocks at all costs!

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.

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Ryan Scribner says:


Adiac Arneth says:

But companies under $1 trade in the after hours of 9-4 pm all the time on NASDAQ and National Stock Exchange. There are also plenty of stocks that trade under 5$ and even $1 that are on NSE, ie; MNGA, FALC, CYTR. The advise is pretty good but i'm just confused on some of the information being said.

Leoraime 1 says:

Just one issue here and it is that u don't invest in penny stocks, you trade them.

wannaknowbad says:

Thanks!!! That helped a lot. I'm just getting started and needed all the information that you shared. Thanks again!

vodkaplusgin says:

Penny stocks are only 1 to 4% of my investment i can take a little risk but for the most part i'm in it for the long haul.

Jim Barb says:

Here the thing if penny stocks was a scam the SEC would have already shut them down second if you never make money with them no one would invest in them and they would eventually go away.

Jim Barb says:

Here's the thing yes he is right about penny stocks but he is also wrong to. How so you ask well with penny stocks unlike reg. Stocks you never never never hold that stock over night they are to volitile. Second he is trying to state that you can trade on the major market without any knowledge which is abserdly false if your gonna invest in ANYTHING you better get some knowledge. Third like major stocks they almost never double or triple but they do from time to time. The long and short is if you do your HOMEWORK you can minimize your risk. You can't litigate a case as a lawyer without knowing its contents. There is a method to penny stock madness and not many can figure out how it works and if you can't figure penny stocks out you can't figure out major stocks. After you study a stock yes they have patterns they are not like a hose when you turn the water on they just spray everywhere no they have a pattern. Penny stocks are from actual real live companies so study the company. The difference is major stocks are from companies with many products where penny stocks are from companies that has 1-2 products like Nissan has many different vehicles where as the company that makes there seats only makes there seats nothing else. I can go on and on but I pretty much figure those that has the balls to study gain knowledge to invest penny stocks can be very rewarding. You can make anywhere from 50-1500 a day trading penny stocks but you can obtain many more shares to make the money where as with major stocks if you have 5000 you can only get 50 shares at 100 each and hold for 1-12 months and make maybe 50-150 dollars. Anyway the big picture is study study study investing isn't for you to throw money at and get money back if you wanna do that try mutual funds risk free and no money made or not much.

256mike says:

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Be kind to one another says:

These schemes your talking about with the newsletter- can I wait for the price to soar and then short sell the stock because we all know it will plummet? Is this a good idea?

hvcool says:

tired buying stocks that are under a penny via tradking , they told me they dont , why and how can i ?

Andrew Bueno says:

you will be huge one day man just keep up the good work

Lacey White says:

Say I bought stock at 50 cents a share and I am waiting for them to go up to $6 a share. When would I set a stop loss?
Do I need to wait for it to become $6 a share before I do stop loss?

Lacey White says:

Do you do a stop loss when the stock is doing well for a while and you just want to make sure it does not go below a minimum?
(when it starts really doing well)

Troy Curtis says:

Good job ..I liked the straight forward

DondrellTv says:

So with that being said Penny stocks are too fast paced for beginners?

Fred Vierheller says:

Nice advice, thanks.

Will dukeher says:

Do you know of any investors that helps with patent processes?

Lucy M says:

Solid information! Keep them coming

Nicole Martin says:

what if you only have a few hundred dollars to start and want to make an income trading? how can you do it with stocks that are expensive?

Wara Kuri says:

Good video have you hard of Agora Financial and True Alpha they keep popping up with their pattern on penny stocks

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