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As you review the following differences between "blue-chip" equities and penny stocks, you may be able to see why professional analysts and institutional investors usually shy away from these speculative shares. The kind of money that the big players use could crack the backs of many of these penny stock companies.

There would not be enough volume on the other side of their trades to enable the transaction, because some penny stocks often trade only a few thousand dollars worth per day. The negative connotation towards penny stocks among financial industry insiders needs to be kept in context. Sure, these investments are often low-volume, inexpensive shares of unproven companies. However, that is the beauty of penny stocks, and is partly why you can acquire such potentially rewarding stocks at such bargain prices.

As well, the lack of institutional interest is one of the keys to our methodology of picking winning penny stocks. Getting involved early, then holding on as the company gets discovered and explodes in price, is partly dependent upon the previously unknown company suddenly gaining interest from bigger players.

Speculation is based on penny stock companies having lower available information about their operations, minimal revenues, unproven management, and often an unproven product or industry. A big-name company like General Electric or Ford Motors will have very little speculative value.

In some cases, traders even use large-cap stocks to hedge or protect their portfolios, out-perform the market, preserve their capital, or diversify their exposure. Penny stocks make their gains by the hundreds of percentages, and thousands, not just by the tens.

There are many bad investments in the penny stock field, so the best way to succeed is by isolating those with superior speculative value. The chance of buying into shares of the company that could multiply 10 organovo holdings stock marketwatch 20 or 50 times in price is the whole idea of speculation.

Large-cap companies usually have more predictable revenues and earnings. Many analysts and investors follow the companies, so that day to day events are quickly factored into the share price, and the stock often reflects a pretty accurate 'worth. In contrast, it is not possible to calculate the marek matuszek forex worth of most penny stocks.

Some do not have difference between penny stocks and options, a revenue stream, or even a proven product.

Comparison between Forex, Binary Options and Penny Stocks Trading - yvajotefihy.web.fc2.com

The shares rise and fall based on buying and selling demand, and that demand is driven mainly by waves of speculation. By their nature, it is nearly impossible to know what price a penny stock share should be trading at, and conventional financial ratios and industry comparisons are rarely effective measures for realizing a penny stock's tangible value. Shares trading on senior exchanges must comply investing in norway stock market regimented reporting requirements.

To keep their shareholders how much money archaeologist make, and to maintain their exchange status, they often must detail the entire inner workings and operational finances of their company to the public. It is simple to get the latest results from IBM, and to take it one step further you can even get estimates of future results. Depending where the penny stock trades, the disclosure level is usually anywhere from mediocre to non-existent.

There are penny stock companies which bend over backwards to inform the public of their every move, but these are few oil futures market speculation far between. It will take more work to acquire the information you could easily get from a larger company, and even then the data may not be available. Peter Leeds Penny Stocks Facebook.

All About Penny Stocks Understanding Penny Stocks by Peter Leeds Get Instant Penny Stock Picks from the Authority! For some penny stocks, speculation is all they have going.

Why don't penny stock investors play options instead? : investing

The better penny stock companies often see their shares soar on speculative buying. Less actual value, greater perceived potential. Penny stocks are also very unpredictable.

Poor visibility levels, lower reporting responsibility. Can be researched properly if Leeds Analysis is applied. Well known, heavily followed companies have a wealth of information available. TA methods can not be applied to penny stocks, except for proprietary Leeds Analysis.

Highly volatile, with more frequent profit-taking opportunities, and greater price swings. High volume stocks have very little spread between the bid buying offer and the ask selling offer prices.

Differences Between Stocks & Stock Options by yvajotefihy.web.fc2.com

More complicated to purchase some types of penny stocks, such as those trading Over-The-Counter. More likely to be taken over by another company, which is usually very beneficial to the price of the shares. More likely to be the company purchasing or taking over the smaller player, which is usually detrimental to the price of shares. Highly exposed to sector influences, to the potential benefit or detriment of the shares. Niche marketing is more important, because penny stocks can not compete with the economies of scale of the bigger players in their field.

Benefit from economies of scale, but can not respond, react, or adapt to the smaller companies quickly enough. Often leave niches exposed for penny stock companies to capitalize. Share price is not strongly tied to fundamental results and the balance sheet. Fundamental results and the balance sheet are the most important factor to the share price.

For certain types of penny stocks, brokers can charge greater commissions, or be problematic. Gains can be seen in short time frames, from hours or days, to weeks or months. It often takes larger, slow-moving companies years for their share prices to advance meaningfully.