As a stock investor, you have to start considering the stocks form small-cap companies for your investment portfolio. Stocks from those companies, many times, can bring great returns that beat the market. Other than that, these stocks are relatively cheap. Yet, they also bring higher risk from their volatility.
People purchase penny stock in the hope that the business will grow exponentially and they can gain huge profit in the future. For that reason, currently, penny tech stocks become popular.
Understanding Penny Tech Stocks
Theoretically, penny tech stocks should not interest average investors. These stocks are speculative and highly risky. That is also supported by the most financial advisor. But, for traders with high-risk tolerance and patience, penny tech stock can profit big opportunities.
Many of these stocks are also not traded on big major stock market exchanges. In other words these stocks do not have tight regulation as other stocks.
Additionally, they are also not as liquid as other stocks. Thus, once you purchase them, then, you can face difficulties to sell it. Thus, they can be the target of a pump and dump’ scheme. That is when there is a trader purchases a big number of shares, then sell them quickly.
Ways to Make Money from It?
The first thing that you need to do is finding the company that generate market share. Then, wait for that company to grow up and build their products and services to increase its overall value.
Or else, you can also find a big company that has been traded on the major exchanges before, but then fall into a penny stock. These companies, at least, have a good track record previously.
Penny tech stocks have the ability to raise, super-fast, due to a single news event. For instance, there is a tech company, a small tech company that has just created a solar panel. That news alone can bring the company’s stock to climb significantly high.
There are also other ways for investors to gain money through penny stocks, that is when the company is acquired by bigger firms.
Writer: Lisa Ramadhani
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