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Penny Stocks

Penny stocks are the most volatile and dangerous stocks that you can invest in. Many of these companies are micro-caps and are extremely dangerous to investors.

These stocks are often attractive to novice investors as they feel they can purchase a large amount of shares for a small price. I cannot stress to you enough the dangerous nature of these stocks.

If you want to play penny stocks you might as well head to your nearest casino and play roulette or craps. Another problem with trading these penny stocks is that the market is very thin. Which means that the stocks are not highly liquid. The bid and ask prices can vary greatly in these stocks because of the thin amount of trading.

My best advice is to stay away from these stocks. If you receive unsolicited e-mails touting these penny stocks, run, don't walk!

Many of these stocks are ripe for pump and dump schemes. These involve early investors buying lots of shares, pumping up those shares through marketing campaigns and then dumping those shares. Leaving late investors holding the bag. by Kerry Zangara

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