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Penny Stocks: Are Penny Stocks Dangerous?
If you’ve heard anything about penny stocks, it’s probably that they’re a bad investment, or an Internet scam. There’s a lot of bad hype out there concerning penny stocks, and the bad rap has made many investors shy away from using penny stocks at are. But, are penny stocks dangerous to investors?
What are penny stocks?
Penny Stock: The penny stocks or shares are an investment options for those who have a small amount for investment and are willing to take risk. These stocks are generally available in very small amount and even a small investor can take a risk of investing few cents in these stocks.
Penny Stocks Risks
The first point to remember is that large market cap stocks are likely to be registered on a national stock exchange such as NASDAQ. The reason for this is that when large volumes and amount are involved, which by definition is true for a large market cap stock, it is extremely difficult to get all that trade done outside a stock exchange. Although it is theoretically possible for a large stock to be traded on Pink Sheets and OTCBB, it will be difficult to sustain high volumes on these, because many people, who trade on recognized stock exchanges, may not trade in these stocks, particularly in large volumes.