Can You Make Money In Penny Stocks?

Yes, you can! But the amount of money you make in penny stocks is directly proportional both to the amount of homework you do and the amount of discipline you have. Penney stocks are one of the most volatile investments into which you will ever put a dime, capable of breathtakingly fast gains and even faster collapses. So if you intend to trade penny stocks, you must be willing to monitor your investments constantly during market hours, and sell when you are in profit. You should also use stop-loss orders if your broker allows it.

Reasons For investing In Penny Stocks
Keeping all the caveats in mind, there are still good reasons for including penny stocks in your portfolio. As their name suggests, they dont cost a lot, so you can build a significant positions in a company for a relatively small amount of money. While you may never own a thousand shares of a blue chip stock, you can own tens of thousands of shares of a penny stock.


Because you can own such large amounts of a penny stocks, you dont need to see a large gain in price to make a respectable profit. Each time the price of the penny stocks of which you own ten thousand shares goes up a single penny, your position will increase $100 in value. But if you get greedy, you can lose your profits by waiting too long to sell.

What To Learn About Penny Stock Companies
Penny stocks are not merely gambles if you spend the time to research them. You just need to educate yourself in certain aspects of the companies in which you want to invest; pay particular attention to the industry in which the company operates; the expertise and reputations of the companys management and the market acceptance of the companys product or services; past trading patterns of the companys stock; and how the sector which the company is in is influenced by economic and political factors.

You can find brokers to trade you penny stocks, but you will pay a commission much larger than that charged for stocks traded on the larger exchanges. Your broker will fill your buy and sell orders, so you wont have to monitor you penny stocks so closely, but his commissions will eat into you profits or add to your losses.

Penny stocks make up an over whelming percentage of all the stocks traded in the US each day. Over three-fifths of all NASDAQ and over three-quarters of all NYSE trades are of penny stocks, and this enormous liquidity means that you will almost never have difficulty getting your penny stocks orders filled.

Penny stocks are a worthwhile investment for those who the effort to understand them, and have the discipline to stand apart from the crowd.

By: Wade Robins

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