PENNY STOCKS FOR BEGINNERS 📈 Basics Of Investing In Penny Stocks
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.
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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.
Often times, these are newly formed companies with no history. Even worse, other times they are companies with a bad track record nearing bankruptcy.
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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My name is Ryan Scribner. I am a nutrition and fitness crusader and I consider myself to be a life student of personal development. I am also an investor. I went from being an overweight college student to living at 8% body fat. About two years ago when I started weight lifting, I was completely clueless. I never played sports in high school and I had no base level of fitness established. I made many mistakes, but over time I developed an understanding. I want to help others develop the body, spirit and mind they deserve. In making mistakes along the way and learning from scratch, I have a lot of value to bring to the table. I recommend my content to those interested in the accumulation of wealth, fitness and nutrition as well as personal growth and development. Recently, I made my own happiness a priority after living with depression for over a year. I want to share with you exactly what I did to get to a state of perpetual lasting happiness. I have also spent a great deal of time learning about investment and wealth accumulation. While money alone doesn’t bring happiness, it allows you to experience many things which do bring happiness. Start the journey. Involve the right mentors and coaches. Learn.