Dispelling Penny Stock Myths
With the rapid growth of the Internet a number of volatile areas of investing have become the tools of scams and myths.
Penny stocks are a common tool for exploiting hopeful individuals with promises of fast and easy riches.
Let me dispel some of the most common penny stock myths for you.
You'll Get Rich Quick Like many other get-rich-quick schemes, it won't take you long to discover the many challenges associated with trading micro cap stocks.
These stocks are highly volatile and losses come just as quickly as wins.
Penny stocks require savvy and intensive research.
Because the companies traded at this value are often traded off the main exchanges and well-below regulated values, you will need to have real connections and a real nose for research to find and verify their financials.
Also, the people perpetuating the hype won't tell you how most brokers won't allow a small number of penny stock trades, so you're still forced to trade in high volumes of cash.
High volumes of cash invested in highly volatile stocks: this is a recipe for financial ruin.
It's Easy to Day Trade Penny Stocks First, a startling eye-opener: the SEC (Securities and Exchange Commission) requires you to keep at least $25,000 of equity in a margin account to day trade.
My guess is that most people eagerly reading about day trading online may be a little shocked to learn they must have at least 25 thousand dollars on hand to even think about this kind of investing.
You Just Need A Newsletter to Give You Winning Picks I won't say all newsletters are scams because there may be one out there that is legitimate, but in the Internet age, most email newsletters involving penny stocks are probably part of a pump and dump scheme or are being paid to promote stocks.
A pump and dump scheme involves exploiting naive investors to artificially inflate the value of a stock then dumping it before everyone discovers the value has been hyped and inflated.
Promoted stocks are stocks where companies pay brokers to promote a specific stock as the "next big thing.
" Penny stock newsletters are often vehicles for promoted stocks.
The adage "if it looks too good to be true, it probably isn't true" applies here.
Thinking a few bucks a month for an email subscription will help you get rich is just wishful thinking.
But Don't Give Up Hope While money can be made with online penny stock trading, this isn't a get-rich-quick scheme.
This area of trading requires extensive research, continued practice and persistent effort over time.
You can learn this on your own and execute your trades from home, but expect to study and practice this for a long time before you really start to see any results.
Penny stocks are a common tool for exploiting hopeful individuals with promises of fast and easy riches.
Let me dispel some of the most common penny stock myths for you.
You'll Get Rich Quick Like many other get-rich-quick schemes, it won't take you long to discover the many challenges associated with trading micro cap stocks.
These stocks are highly volatile and losses come just as quickly as wins.
Penny stocks require savvy and intensive research.
Because the companies traded at this value are often traded off the main exchanges and well-below regulated values, you will need to have real connections and a real nose for research to find and verify their financials.
Also, the people perpetuating the hype won't tell you how most brokers won't allow a small number of penny stock trades, so you're still forced to trade in high volumes of cash.
High volumes of cash invested in highly volatile stocks: this is a recipe for financial ruin.
It's Easy to Day Trade Penny Stocks First, a startling eye-opener: the SEC (Securities and Exchange Commission) requires you to keep at least $25,000 of equity in a margin account to day trade.
My guess is that most people eagerly reading about day trading online may be a little shocked to learn they must have at least 25 thousand dollars on hand to even think about this kind of investing.
You Just Need A Newsletter to Give You Winning Picks I won't say all newsletters are scams because there may be one out there that is legitimate, but in the Internet age, most email newsletters involving penny stocks are probably part of a pump and dump scheme or are being paid to promote stocks.
A pump and dump scheme involves exploiting naive investors to artificially inflate the value of a stock then dumping it before everyone discovers the value has been hyped and inflated.
Promoted stocks are stocks where companies pay brokers to promote a specific stock as the "next big thing.
" Penny stock newsletters are often vehicles for promoted stocks.
The adage "if it looks too good to be true, it probably isn't true" applies here.
Thinking a few bucks a month for an email subscription will help you get rich is just wishful thinking.
But Don't Give Up Hope While money can be made with online penny stock trading, this isn't a get-rich-quick scheme.
This area of trading requires extensive research, continued practice and persistent effort over time.
You can learn this on your own and execute your trades from home, but expect to study and practice this for a long time before you really start to see any results.