The share market is booming, with more traders every day. It works by preying on the greed of every individual. Share markets in every country work under separate rules set by their own country’s regulatory committees. There can be as high as 5000-8000 companies listed on major trade exchanges, like NYSE, NASDAQ, BSE, IDXNASDAQ: IXIC at https://www.webull.com/quote/idxnasdaq-ixic, etc. However, all of them are not attractive to the beginners, owing to the high prices they trade at. Penny Stocks come to the rescue here. Read below to get a full understanding of what penny stocks are.
What are penny stocks?
Penny stocks are shares of the companies that list them at as low as $1. Anything between $1 and $5 is put in the basket of penny stocks. In India, penny stocks’ cost is as less as Rs. 10 and may range from Rs. 10 to Rs. 2000. Some companies listed in the NASDAQ trade at $5 or less and are still listed in major exchanges. Penny stocks, otherwise, are not listed on the major exchanges. These are extremely attractive owing to the cheaper prices. Penny stocks are also called cent stocks in some countries. They are often sold on the illegal pump and dump schemes on pink sheets.
What makes penny stocks risky?
The high illiquidity of penny stocks and the extreme speculative rise and fall of their values make penny stocks riskier, to begin with. However, for a risk-averse individual, the penny stocks can turn to be a good option, especially if there are profits.
For example, if one buys 30,000 shares from penny stocks at Re.1 each, and there is a surge or profit of Re. 1 in a couple of days, the buyer is benefitted 100% and gains a profit of 30,000. This is seldom seen …