Kinds of Stocks – Lesson 4
All beginners think that stocks are the same and the easiest ones are penny stocks – stocks under . They are wrong. All the stocks are risky, but penny
stocks are riskier, because they hold risk in themselves as being small that can be easily manipulated. These kinds of stocks are called pump and dump scheme stocks.
What we mean by that is these stocks are pumped to go higher than dumped down by some kind of manipulation.
These stocks trade with low volume and one day the volume is raised to millions without notice. These stocks constitute a big danger to beginners because they don’t know
why these stocks go up so fast or go down so fast. Beginners are attracted to big gain when they see for example a stock was and in a day it goes to . So they think
they can easily make huge money from them. But in real, they forget the reason why these small stocks move that fast in short period of time.
Another reason why beginners trade penny stocks is that they don’t have enough money to trade bigger stocks.
Not all penny stocks are dangerous, they are some which don’t belong to the pump and dump scheme stocks. These stocks are usually trading slowly and they are not volatile.
Another important thing to mention is that there are some sectors where almost their stocks are non volatile like financial stocks. That means they don’t move fast. On the contrary, some
other stocks move fast and are volatile like drugs stocks.
To learn more about how to trade all kinds of stocks, please check our training levels by videos and e-books or use our subscriptions.
Thank you for watching.
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