Stock Trading Strategy: 3-Book Bundle – Stock Market Investing for Beginners + Day Trading for Beginners + Penny Stocks + bonus content: Trading Psychology of Millionaire Investors pdfdrive com

Chapter 3
The Gist of Penny Stocks
There are two things that trading Penny Stocks are very much known for:
1. You can quickly make a big amount of money.
2. There is a high probability that you will lose a lot of money.
These are two opposing extremes that you will be facing. Of course, your
objective is to rake in serious profits. Unfortunately, the majority of the people
who trade Penny Stocks fail to make any positive return at all. But do not be
discouraged because there are still people out there, the well-experienced and
real expert traders who doubled, tripled, and continuously growing their money
more than you can ever imagine.
Losing a trade is normal. Even well-experienced traders make the wrong
investment decisions from time to time. However, you must avoid such mistakes
as much as possible. Now, in order to help cut down your potential losses, you
should be aware of the risks that you will be facing when you trade Penny
Stocks.
The Risks
Small Companies
Majority of the companies in the Penny Stock market are small companies. In
fact, they can be so small that they do not even meet the minimum capitalization
requirement. You will find many of these companies on the Pink Sheets. Since
they are small companies, it is hard to tell if they are stable enough and if they
will even grow. Many small companies also tend to be less professional.
Start-Up Companies
Many of the companies that issue Penny Stocks are start-up companies.
Therefore, they tend to have a very limited history that you can track. This

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makes it risky because you would not know for sure if the business is legitimate
or if the company is operating a scam.
Less Transparent
Penny Stocks do not have stringent requirements. Remember that the companies
on the Pink Sheets are not required to file with the SEC to meet the minimum
capitalization requirements.
Many companies on the Pink Sheets only reveal very limited information about
their business, so it is hard to get sufficient and accurate data. Worse, some
companies operate a scam.