Cheapest Penny Stocks
Some traders find penny stock trading lucrative. It gives them the hope and possibility of high potential returns with very little investment. Online, you can find success stories to back those claims, and such stories keep the interest alive. But beware, penny stocks are extremely volatile. If you are on the right path, you may gain. But with cheapest penny stocks, things can be entirely different.
Penny stocks or micro-cap stocks are the shares of a company. These stocks trade at a minimal price, between $0.01 to $5.00.
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The Cheapest Penny Stocks for the Beginning of 2019
The five cheapest penny stocks at the beginning of 2019 included Arotech Corp.(ARTX), Groupon (GRPN), Agrofresh (AGFS), JVA Holding Company Inc., and Zynga (ZNGA).
Buying the Cheapest Penny Stocks Can Be a Risky Technique
Penny stocks sell for less than five dollars. There is a reason these shares are cheap. The underlying assets of those stocks are companies in financial troubles or bankruptcy processes; hence they are available at such low price. These stocks are also known by the names “pink sheet stocks” or “microcap stocks.”
Penny stock trading is very risky. Trading with these cheap stocks puts your money at risk.
For example, if an individual buys $0.20 shares and the stock rises by $0.10, he gains a profit of 50 percent. But the share can also slide by $0.10, causing a loss of 50 percent.
Notice the spreads as well. If you buy a penny stock at $0.50 and the spread is $0.30, you are already at 30% loss just as you placed your purchase order.
Meir Barak, who runs largest day trading academy in the world, and over 50,000 YouTube channel subscribers, believes that trading any stock under $5.00 is unreasonable for the prudent trader, as those tend to behave erratically and not in accordance with market conditions. He shares all his experiences as an up and coming trader on his bestselling book, The Market Whisperer.
Let’s understand penny stocks further…
Penny stocks have undergone a revolution in the stock market. Traditionally, penny stocks were priced less than a dollar. Now they are regarded to stocks traded for less than $5. Most penny stocks do not trade on the major market exchanges.
Penny stocks suit traders and investors with a high tolerance for risk. Penny stocks are volatile and result in a higher possible reward besides higher risk. Taking the risk factor into consideration, the investors must take special precautions. An investor must commit to a ‘stop-loss order’ prior to entering the trade. They must know when and where to exit if the market moves in the opposite direction and not as intended.
Buying the Cheapest Penny Stock is Even Riskier.
Trading penny stocks is highly risky as their markets have less strict requirements related to governance, financial transparency, and assets as compared to major exchanges such as Nasdaq, for example. These stocks are either traded on over-the-counter market or pink sheets. The disclosure and the level of transparency are different for different markets. It can span from full and current financial reports on to very little reporting. Moreover, these companies require no quality or corporate governance. These companies have no income, assets or revenue to trade like the established companies. So, one has to be vigilant to ensure buying worth.
Irrespective of how penny stocks trade – pink sheets or OTCBB, finding credible information is difficult. Remember, there are no minimum standards to remain on the Pink Sheets or the OTCBB. Illicit players can dupe others by attracting inexperienced traders into investing in some cheap stock and take away the money. Caution is always advised.
Alternatives Cheapest Penny Stocks
There are alternatives available for cheapest penny stocks. You can always start trading regular stocks.
Regular Stocks Are Better for Trading Than Cheapest Penny Stocks
To reduce risk, you can start trading regular stocks, priced at $5 and upwards. The best regular stocks are blue-chip stocks. Blue chip companies provide investors with extra safety measures in volatile markets. The best ones even offer an amalgamation of high P/E ratios, stable or rising dividend yields, and good growth prospects.
Tradenet Educational Programs Allow you to Apply for Tradenet Funded Account.
Trading is tricky. But the good news is that one can learn to make profitable trades, if one is talented and hard working enough. Tradenet is a day trading academy that provides live education on trading from the world’s leading traders and best trading company. But Tradenet does not offer a funded account. It utilizes the services of 3rd parties. Just pay for your education and have the trading capital you need. You can apply for a funded account of $240,000 and get up to 85% of the net profits.
Tradenet’s funded accounts are made to help you become a profitable trader, because they allow enough buying power to trade heavy stocks like Apple and Tesla. In that case, trading pennies is unnecessary.