Learning The Basics Of Penny Stocks
Jun 01, 2010
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Hunt Google for penny stock and you will be deluged with sites promoting the active, short term trading of penny stocks. This attract people owing to the greed factor (the promise of huge % returns in short time) , the "I don't have much money" factor, and lastly the knowledge (or lack of) factor. penny stock brokers.All these sites prey on these three aspects to get people to sign up to day trade penny stocks or at least try to. The mass of the time, their version of day trading is holding for a few days, rather than only go in and out the same exact day.
Now not all of these sites are bad. There are a small that are in it for the longer haul, really trying to find the lozenge in the rough. The only issue that is on no account talk about is the true rarity of that happening. I do not have precise stats, but I would guess for every 1000 penny stocks, maybe less than 5 or 6 ever build up to a real corporation and get listed on a regular exchange. What is a regular exchange? Nasdaq NMS, Nasdaq small cap, or NYSE. The rest go to 0. It may take some time, but it happens - maybe a few get taken over or merge but rarely is it a huge boon to shareholders. Its typically a take under at some point. What most people eventually figure out, is that short term trade penny names rarely lead to any kind of large profits for anyone but the people who are issued stock to sell for free.