Penny Stock Trading – What Is It?

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Penny stock trading is the trading of small value stocks, also known as microcap stocks. The term penny stocks was founded many years ago as it used to be defined as all stocks that were traded below the price of $1 but now includes all stocks that trade under $5. Along with these stocks being low in price, the volume that are traded is also quite often low as a lot less number of shares are released. Quite a lot of companies that have these low priced shares have just been floated and are fairy young in terms of the stocks age.

Trading Penny Stocks

Trading penny stocks can be very lucrative which makes it very appealing to those who either like a bit of risk of really know what they are doing. If you know what you are doing you can stand to make very substantial gains in a very short amount of time because of low price you pay per share and the volatility of the market. You can sometimes make gains in the area of 500% or more easily when you think about it, say you buy a share for 5 c and then it is all of a sudden at 50c then you have made a 500% profit. Although you can make massive gains you also have to realize that it works both ways meaning that you can make big losses just as quick for this same reason.

Many new comers to the stock market start trading small cap stocks because of the low startup capital needed. You can start trading these small cap stocks with just a few hundred dollars whereas you would need at least a couple of thousand to get started trading blue chip stocks. For example, to buy just one share in apple at the moment would cost you around $483 (as of 7th October 2013).

Trading penny stocks has gained a reputation in some circles as being rigged in a way because of so called pump and dump tactics. A pump and dump tactic is like this, someone says to people that they know a lot about trading small cap stocks and they give you penny stock tips. They give a lot of people the same tip and because of the low volume of stocks traded the stock price rises artificially because there are a lot of people buying it at once, this is the pump. Then when the stock tip goes out to the investors a large volume of shares are sold off, the dump, and then the people that sell off while the price is still high make a handsome profit while those that don’t sell off in time end up making losses. This method only works if you are on the receiving end of the information and buy early and sell as soon as the tip comes to sell. If you are on holidays or unreachable and miss the stock tip to sell then you could lose everything. You can also end up making very big returns quite often if you receive good information.

Now that you know the basics behind penny stock trading you will be able to better understand what is going on and make a better informed decision if you wish to start your journey in the lucrative area of penny stock trading.

penny stock tips

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Microcap Millionaires – Where it all began?

Before I delve into Microcap Millionaires I need to tell you the background as to why I even started looking for investment opportunities, I think my story will be very similar to a lot of you out there. I have been a trying to be a bit of an entrepreneur over the past few years looking for different ideas and different strategies to make multiple streams of income. I realized that I am not going to get where I want to get in life by just working a 9 to 5 job. I have a University degree and I have an average job but still find it difficult to get ahead in this day and age, I have been living my life from pay check to pay check and there is never anything left over. A while back I decided to do something about it so I started a search for business ideas to start generating multiple streams of income so I can finally do the things I want to do and finally start building some wealth.

In my search, I was reading this entrepreneurial book about the differences in mind set between the wealthy and poor and difference in the way parents teach their kids about wealth and it really rang home to me. The author was explaining that the wealthy teach their kids a golden rule to accumulating wealth is that you have to spend less than you earn and the remainder left over you need to put it to work to grow your wealth. I know that it is easy for a rich person to say that but the theory is spot on, if you always save a little every payday and invest the rest responsibly then over time you will accumulate wealth. I f you always spend all of your money then you can never grow you money.

So since then I have been finding various different ways to invest my money or make my money work for me. I have been looking for sustainable business opportunities and one of those such opportunities I came across was Microcap Millionaires. While I was looking for different ways to invest some of my money I started to think of trading stocks on the share market like so many others. When I started looking into it my friend told me about trading penny stocks as there is a lot more faster gains that can be made if you have good advice but there are also quicker losses. This penny stock trading intrigued me so I started to research more and came across the Microcap Millionaires newsletter. What followed surprised the hell out of me.

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