Invest Cautiously in Canadian Penny Stocks

2007-11-09 05:11:17

( Business )



As the name suggests, penny stocks are equity issues that sell for less than one dollar per share. Small corporations are usually the owner of Canadian penny stocks, and they often do not meet the minimum requirements for listing on a major stock exchange. For this reason, they trade in the over-the-counter market.

The primary advantage you will get from investing in penny stocks is that share prices are so low that you can buy as many shares as you want. You will find that many traders specialize in penny stocks, because penny stock investing is lucrative. It is possible to make a hundred percent profit in a very short time of trading in Canadian penny stocks. However, the potential for loss when investing in penny stocks is also exceptionally high.

Before you pour substantial amounts of money into Canadian penny stocks, know that there are reasons why they are so cheap. Too much debt, poor management, no earnings, or simply the lack of enough interested buyers to make the price go higher are just some of these reasons. Another thing that you should watch out if you decide in penny stock investing is that there are a number of unethical people who manipulate the price of penny stocks.

If you wish to make some investments in Canadian penny stocks anyway, do spare some time to track the stock's movements and see if it has made any headway. Gather meaningful information about the company, and resist the temptation to act on a hot tip passed on to you.

Be wary of penny stock brokers who promote companies that either have minimal assets or no assets at all. Look for small grassroots companies that have the potential to grow over time. It is a high-risk with potentially high returns. Try to invest carefully and conservatively in Canadian penny stocks.


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