July 25, 2010

Day Trading Nightmares

By Planet Wealth

pPenny stocks can be a fantastic way for a stock trader to earn some money . ldquo;a href=http://www.talkgold.com/forum/r46803-.html target=_blankPenny stocks/ardquo; are securities that trade for extremely small money, often times a penny or a fractions of a penny . They can be this low for a variety of reasons, but it is often because the company has hit on tough times. Because of this, penny stocks do run the risk of losing a investort a lot of dough if the company fails wholly. But, since the securities trade for so low, a trader can buy a huge number of shares in the hopes that the stock price will increase dramatically . Buying very cheap stocks in the hopes that they rise in price is sometimes known in the stock trading world as ldquo;dumpster diving.rdquo; Because the stocks are selling at such low prices, a price change of even a single cent can be a massive gain percentage wise. For example, if a stock were selling at the price of a single cent, and a trader bought ten thousand dollars worth of shares of this stock, if the price were to double to two cents, the trader would now have twenty thousand dollars worth of stocks. br /br /Thus, a one cent increase in a href=http://www.moneymakergroup.com/Stocks-Options-Futures-f155.html target=_blankstock price/a, which may seem very small, has the possibility to result in very large gains. Unfortunately, this is often not the case, as prices on penny stocks often do not go up much , and if they do, it may be by fractions of penny . Additionally , there is usually a reason that they are selling at such a low price, and it may be because the company behind the stock is about to go bankrupt . Therefore, it can be very risky to buy these securities ./p

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