What Are Penny Stocks? How To Invest In Penny Stock

What is Penny Stock?

Penny stocks are called those shares which are available in the stock market at a very low price and their name would probably be read as “Penny Stock only” because of the low price. Shares available for less than $1 in America are called Penny stocks. and in India Less than Rs. 10, shares are called Penny stocks. As I told you all just now, Penny Stocks are shares that are traded at very low value. And these shares belong to a small company. Whose capital is very less or does not have a very large turnover. And it is not a very popular company, so it does not run in much profit. Penny stocks mostly run in losses

In such shares, the promoters of the company are engaged in trading for more time because people do not invest much in these shares. And all these shares are traded at a low rate and hence we can also say that there is a problem of liquidity in it, due to low value, the investor gets frustrated many times and his investment stays there and it is also worth noting that investing in these stocks is always a risk and there is a fear of losing the investment.

How to Invest in Penny Stock

How to Invest in Penny Stock: So if you want to invest in Penny stocks, then let us tell you that penny stocks are available at a low price and investors also invest very little in them but the time value in them would have been very high Also the stock can give more returns in less time and the risk is also very high in it.

So if you have to invest, then according to us, you should select such a stock, which has a good record behind it and does not have many ups and downs in its rate like if you can buy a share in its 10 rupees and that If the market value of the share becomes Rs 15, then your investment increases by 50%, if you wait for the increase in the rate of the share, then there can be more risk, so you have to take every step carefully.

How To Start Investing In Stock Market How To Invest In Share Market

So the company whose shares you are buying, you should see whether the company has a good track record or not if it has gone into loss due to the problem, but the company has a demand in the stock market and good capital with good sales. If yes, then you have less risk in investing. Many times after taking a big loan, many companies go into loss due to interest. It seems that the shares of such a company can be called Turnaround stock.

Because the rate of these shares remains low for a short time, but after a few days they also come in a good position, you should invest in such shares only.

How to find penny stocks share

To find out about penny stock shares, it is necessary to see the market cap of the company, the market cap of the penny stock company is the same or less than the Small Market Cap company, and also the value of the penny stock share is below Rs15.

Advantages And Disadvantages of Penny Stocks

In penny stock, a lot of shares are available for less money, so the investment can be done with a small amount.
While buying penny stocks, the investor thinks that a share of 10 can easily go up to Rs 20, while a share of Rs 500 can take a long time to go up to 1000,
New investors can invest in shares with less money and can make good profits by investing in penny shares.
Their chances of increasing the price in a short period of time are also high. A stock can also give high returns in a short period of time

What are the risks involved in Penny Stocks?

The public has very little information about Penny stocks

If any investor wants to invest anywhere, then he will have good information, only then he can invest by selecting a good stock, but how to invest Penny stocks is most important because penny stock company are not such a popular company, that’s why the public does not have their information. That’s why there is a lot of risk in investing in them.

There are no minimum standards
There is no minimum standard inside penny stocks and minimum standards are not required to remain on OTCBB and Pink Sheets stock exchange but the same stock does not survive on any major exchange for many days.
Lack Of HistoryWithout knowing the history of a company, it is very risky to invest in its shares, so the company of Penny stocks is not so popular, so they do not have such a good history, so investing in it is a lot of work.

Liquidity
When there is not much liquidity in the stock, then there is a lot of problem in selling and buying the stock. Because of this, it is very difficult to estimate the rate of the share and there is a lot of problem in investing, secondly it becomes easy for the low liquidity traders to fraud.

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