But penny stocks, while attractive for their value-based possibilities, are not without their risks. Potential penny stock investors need to know who they can trust, where they should go, and what they should avoid.
DON’T Listen to Online Non-News Anything
Stay away from penny stock discussion boards and chats. Not only are most of the visitors to these sites on the same amateur level as you, any information they discuss is likely gleaned from mirroring forum sources. The root of much of this information is in fact manipulative false hype generated by those with something to gain from your investment.
DO Diversify
Like any good investor at any level of the game, you want to make sure your penny stock picks are spread well through multiple investments. Keeping your eggs out of one basket keeps you from sinking with one ship (and one or two will sink I assure you.) Avoid going to the other extreme and spreading yourself too thin, or else a profit becomes impossible.
DON’T Stray from the Big Boy Exchanges
This one’s a no brainer. Avoid putting your money where the Securities and Exchange Commission doesn’t oversee the operation. It will especially make a difference when it comes to penny stocks. Anything traded on an unregulated market so cheaply almost certainly ends up being a scam.
DO Expect to Experience Some Turbulence
The penny stock market is a wild one. That’s sort of the point of why they’re so cheap. Go into it prepared to encounter some hard truths and learn some hard lessons. It’s a great way to learn how the stock market operates without risking too much. You should prepare yourself for the possibility of losing, as much as you dedicate yourself to winning.
Remember: the main thing with penny stocks is to have fun while you try to make money. Once you move on to bigger possibilities, having fun might be a hard thing to do.
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