The answer to this question really depends on who is asking. If you speak to a novice trader, they might say that they are. If you speak to a seasoned wall-street big-shot, they might say that they are. If you however speak to a Penny Stock learned guru, then the answer is most definitely “sometimes they are“. The question of “Are Penny Stocks Extremely Risky” is really a somewhat complex one. I know that it really doesn’t sound like it should be, but there is so much that goes into defining risk in general, that trading penny stocks is no different.
I will go ahead and answer this question below by taking an excerpt from our Ultimate Guide on How to invest in penny stocks for beginners.
Are Penny Stocks Extremely Risky – The Answer
Just like any other stocks that you would buy out there, you really are never 100% guaranteed that you will actually make money from it. As the saying goes, “Do not invest any funds into a stock, where you are not prepared to lose 100% of your investment”. So, to answer the question; yes Penny Stocks are extremely risky, but they are only risky to the untrained trader. Alright, now that we got that out of the way, let’s really grind down to the details of why Penny Stocks might be risky, or why they might not. I will go ahead and break this down into two parts and end with a conclusion. The extreme guide on how to invest in penny stocks for beginners continues..
Why exactly are Penny Stocks risky? Well, there are zero rules and no regulations around them to begin with. Without rules and regulations, Penny Stock company CEO’s can just put out PR’s (Press Releases) with fluff information. Something along the lines of “From the CEO: the company is currently working on bla bla bla and bla products, we look forward to hopefully be releasing the bla bla product in the near future. We hope to have the product selling in bla bla bla stores by the end of the year and expect the bla bla product to make us revenues in the amount of bla bla bla”. You see how easy that was? The Penny Stock company’s CEO not once stated that the company would release a product on a specific date. In fact, they never even said the product would even be completed, or that it would even be sold in any stores. It was all based on; I look forward to, working on, I hope to, I expect that, etc.. This is what we in the bizz call fluff news. So, if you can’t trust the CEO of the company, you can then at least talk to your fellow traders on the message boards and get the real scoop from them, right? WRONG, most of the so-called friendly traders out there pre-load a stock and are trying to sell you their shares and make money on you. Do not trust any fellow traders, unless you know them in person and know them to be trustworthy. Some other reasons why penny stocks are risky; pump and dump, pumping, bashing, pre-loading, stock splits, dilution, fake PR’s, fake news marketing via email, crook CEO’s and companies, de-listing and the list goes on and on.
Why Penny Stocks Are Not So Risky? Still with me? I know that past paragraph might have scared away most of the readers. You are probably thinking to yourself, what can this guy possibly say to make me believe that Penny Stocks are not so risky after all of this pump and dump, dilution, fake PR talk? Well, I am just being up-front with you. Penny Stocks are not for the meek. If you truly are ready to learn more about micro-caps, continue on reading this “how to invest in penny stocks for beginners” extreme guide. Penny Stocks are really not so risky if you know what you are doing. If you spend the time reading this guide from beginning to end, you will be armed with both knowledge and experience (yes, even experience — after doing some paper trading – more on this later – via the Golden Penny Stock Tips) to help you beat all of the risky stuff that you will be facing. Once you figure out how to spot the pumpers, the bashers, the fake PR’s, how to read through the fluff news, how to screen stocks that have a good share structure (more on this later – via the Golden Penny Stock Tips) and more; you will be ready to go head first and own on this OTCBB & Pink Sheet markets. You will no longer have to worry about such questions as “are penny stocks extremely risky”.
Conclusion on the “Are Penny Stocks Extremely Risky” Question! As you can see, Penny Stocks can definitely seem very risky to the novice penny stock trader, but once you actually start figuring out the know-how about the Penny Stock world, you will see that the micro-cap world is really not all that scary. With the right training, the right mind-set and the right ideas; you too can master this like I did.
I really hope that the information found on this page were useful and helpful in helping you figure out some of the what, how, when, why questions concerning Penny Stocks. Trading stocks in general requires knowledge, experience, skill and patience. To answer this question of “are penny stocks extremely risky, why not start with the Ultimate Penny Stock Trading Guide? Check it out here: How to invest in penny stocks for beginners.
Cheers..