Why dont penny stocks work?
by Gary James on Monday, August 16th, 2010 | 3 Comments
Ok so about a month ago i wanted to get into buying and trading stocks. I went to this mock trading site called "howthemarketworks.com" and started with only 0. I decided to specifically dead with penny stocks and now a month later im making about 0 a day. Ive been told that penny stocks dont work but they seem to be working out great for me. Am i missing something?
Hey everyone, Gary here. Stock trading was never my forte'. I lost tens of thousands of dollars listening to stupid advice and letting other people trade for me.
Yes you’re missing one big item, there is a BIG difference from the real markets and the make believe ones
The make believe market does not emulate real trading, market making, bidding and offerings, volume and availability.
If you are foolish enough to believe that you can profit in the real market as you do in the make believe one, go for it.
B.T Barnum once said, "A fool and their money are soon parted", playing in the penny stock market will prove his point
They can work just fine but they are just much more risky than most stocks. The American public is generally too dumb to understand this, so most people give penny stocks a bad wrap.
When a stock is that low in price then it’s risky. The price is low for a reason. It’s often a sign that a company is in debt. Look at Enron stock. It was around $80 one day and it went to less than a dollar days later. If a stock is an IPO then that may have potential. You can lose just as much money on penny stocks as you can on high price stocks.