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Day Trading Penny Stocks - Is It Really Worth The Risk?


Is day trading penny stocks really a wise move for your investment activity? Many people are wary of this activity, and with good reason. While you certainly do hear the glamour stories of the many investors who’ve made fortunes with penny stocks, you often don’t hear about the thousands who’ve lost a ton of money in the process.

Penny stocks are notorious for enabling you to make either huge gains or losses overnight. Many people hear stories about somebody who made a million dollars in a couple days day trading penny stocks and become so enamored with that they don’t realize these same investors (gamblers, really) most often lose all that money soon after.

Believe it or not, penny stocks are nothing more, nothing less than glorified gambling. Yes, there are some investors who can make a lot of money with this avenue, but only if they are sure of what they are doing. The reason for their volatility is simple: every one of these companies that are trading for less than $1 per share got into the situation for a reason.

Usually, it was either bad management, poor economics, or a combination. Therefore, you’d better have a good reason for thinking a turnaround is about to occur before laying your money down.

The main reason day trading penny stocks is so risky is that it doesn’t take much to affect your investment. For instance, if you buy in at .25 cents, and the stock goes up to .50 cents, you’ve just doubled your investment just by a .25 cent gain! Of course, the same risks apply for it going down.

While a .25 cent swing for most stocks would be hardly noticeable, for penny stocks they can be either mega profitable or suicidal. Therefore, if you do plan on entering the exciting, non-stop action world of penny stocks, you need to be sure you are an expert at looking at a company and spotting a turnaround possibility.

Think about this: most of the world’s top investors have gotten to the point they are at by investing in good stocks that have exhibited a long term of profitability. When you invest in penny stocks, you voluntarily take yourself out of that realm and focus only on companies that have proven they can’t turn a profit. Yes, sometimes miracles or turnarounds do occur, but not very often.

If you do plan on entering this world of day trading penny stocks, you need to become an expert at spotting companies you are sure will turn things around and jump in at the right time. No, making money with penny stocks is certainly not impossible, but you must know what you’re doing, and always monitor your investments closely.



20 comments:

  1. I remember my first penny stock it funny but it a true story. I brought 400 shares of hmny and it went from 4.95 to 3.50 so I thought nothing of it because it went to $6.00 two weeks ago. so each day it was losing 5 cents and I thought nothing of it. But something strange happened. when I was in the airport bus line I saw a guy who looked like the coo for movie pass walking in the middle of the high way with a black suit on. I said to myself omg that guy look just like the coo from movie pass. But i kept the stock anyway I SOLD it at 2.00 right now it trading 0.01.

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    1. When trading Penny Stocks you always must watch. Anything can happen, and you have to be willing to sell for a loss at times.

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    2. I've been following this board for months now and i'm up about 5K in profit compared to my losses last year. They have everything here, penny stocks Free Trading Courses, and plenty of other useful information.

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  2. Which books do you recommend me to start reading?

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    1. I will get you a list together later today. You can also check out some of my article in under the Penny Stock tab.

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  3. Penny stocks are the best way to make money fast. Although, you should be skeptical about how you go about finding the best Penny stocks. Some are sketchy and others are winners. It's all up to which one you select.

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  4. I tried penny stocks years ago and did well at the start but because I had no true knowledge on how they worked, I lost it all. I didn't want to risk it again without knowing the ins and outs of it. I am glad I found this site. Stock education and stock courses can add up if you are getting information from multiple sources. I have watched some of the streams on here and I think I will stick with Transparent Traders for all my information. Thanks.

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  5. Indeed, the ones that lose are gamblers or beginners who aren't ready for this yet.
    Penny stocks is related to gambling because every decision it is a probability, but there is a lot of effort put into that decision, is not made randomly, because that's when you lose.
    Good article, wise words! keep it up!

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  6. Thank you so much for the informative blog! Stocks can be pretty confusing but I still want to try it despite all the reviews that it gets. Any stocks is fine as long as it works. I still want to understand penny stocks more in the future.

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  7. Penny stock is just gambling ..I don't like gambling.. You may be lucky to make a fortune and you may lose everything.. Penny stock is a no no for me

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  8. It seem one can make fast money with penny stock if one knows the way around but its a bit risky since one can lose huge amount of money in it too.This post is very informative.

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  9. I do not take a risk investing some cash on penny stocks. I believe it profiting but Im being paranoid of what if I lose my whole cash. This isn't possible, is it?

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  10. I don't know very much about penny stocks but I´m interested about. Ill follow your posts to know more.

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  11. Like any other venture, penny trading requires a time investment in learning the markets. Long as the passion is there anyone can be succesful.

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  12. I like the info in this article. I have never tried penny stock cause I'm that guy who avoids risks I don't have an idea.

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  13. Even though penny stocks is nothing but gloried gambling I don't know if there's a way one can gamble to just win. It a sure way to make very easy money.

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  14. Loved the picture, so yeah, it is like that, also, great for beginners of people who want to keep a low investment (with also low profit), idk... It's safer, and I feel comfortable with it , ��

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  15. Yep defimitely something for experts only, been seeing many people lose so much money in day trading, it sucks. Good article, always nice to be around here.

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  16. Penny stocks are one of riskiest ways to make money. However, that being that they are also an incredible way to make money. Once I made $600 in 3 minutes playing with penny stocks. Best of luck to anyone who participates.

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  17. Great article, thats pretty much it when it comes to panny stocks and day trading, most important thing to say: is not for everybody, you need to be ready for this step! Good job guys!

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