Should I Buy Penny Stocks? Penny stock trading tips, penny stocks explained, penny stock trading for beginners, penny stock trading 101, penny stock trading for dummies, penny stocks 101, penny stock scams, penny stock basics welcome to looking at the markets with David Moadel
today we're going to be talking about an interesting and sometimes controversial
topic should i buy penny stocks penny stocks which is a catch-all term for
stocks under five dollars per share
they're not always a penny are tempting for speculators IE gamblers and retail
traders with small accounts yet
are they a worthwhile investment let's talk about that in my opinion the answer
is no penny stocks Lord traders in with promises of potential gains of a hundred
percent or five hundred percent or a thousand percent but that's like buying
a lottery ticket and expecting to win the million-dollar jackpot
generally speaking you're more likely to lose part or even all of your investment
so let me give you some examples here is an example of a penny stock
here's the chart does this chart look like a solid investment to you and this
is a great basin
it's a ticker GBS n lost nine dollars in one day and look at the overall trend
there I I think it's safe to say the trend is down
going from this price to to that price
here's another one
here's another example this is probably not what you would want your investments
to look like this is a ticker f
I'm sorry x FTB xfit brands and lost twenty percent in one day
not a good day for that particular stock and the overall trend is down for sure
here's yet another example
it's not difficult to detect a pattern here and this is ticker sng ex-college
annex or solid Phoenix as the case may be
and look at that drop there mmm yeah
trend is down and but hey at least it only lost three percent in one day
I guess that's comforting or not I could come up with more examples if you want
but I think you get the idea and i'm not saying they're all like this but a lot
of them are the fact is many of these companies are tiny and run the risk of
going bankrupt when investing you should be looking for companies with solid
fundamentals and plenty of capital the wide bid-ask spreads on many of these
relatively illiquid stocks coupled with the prevalence of pump and dump schemes
makes it even harder for retail investors to turn a profit on these
penny stocks if your trading account is small
consider options or option spreads
as a better choice than penny stocks for example you can oftentimes purchase a
high-quality call or put spread and usually i'm thinking about vertical
debit spreads but there are many types of spreads and you can purchase them at
an affordable price
give you an example here here's an example of an apple call spread for less
than three hundred dollars and there it is at the bottom in red right there and
I'd like to think that most traders can afford three hundred dollars if not then
you can hopefully save up enough money to purchase something like that and
there are calls and call spreads and put in put spreads that cost even less than
that
so why take your chances with penny stocks when there are better ways to
invest stick to solid investments for better returns and greater peace of mind
so if you like more help with this or with just about any topic in investing
or trading or finance feel free to contact me
my email address is David Modell @ gmail.com thanks a lot and hope to hear
from you soon
ok