In a number of occasions, penny stocks are said to highly speculative due to their limited disclosure, lack of liquidity, small capitalization, limited following, and wide bid-ask spreads. In addition to trading outside the key market exchanges, penny stocks have got a small market capitalization and their prices are relatively low. However, there is some big news in the penny stock market that will make you come up with opportune buy and sell decisions, a clear understanding of your research, and in turn, enable you to reap more profits.
Earn more Rewards by Playing Sentiment
It is obvious that the prices of the stock changes depending on the buy and sell decisions made by the investors. A clear fact is that, in many cases, the decisions of these investors are usually wrong. They usually tend to purchase the shares during the price peaks with an intention of selling them during the price bottoms. A high level of negative investor attention is associated with stocks distaste, fear, and panic of stocks selling. But, the big news is that you are capable of reaping more profits by playing sentiments. Developing a detailed understanding of the mob mobility will make you incorporate the given technique into the overall penny stocks trading approach.
Shares Generate Greatest Moves within a Short Period of Time
The big news for penny stocks investors is that their shares have got almost 100 percent chances of generating higher moves within a short period of time. Approximately 80% of the changes in the penny stock share prices, be it an increase or a decrease takes place within a short period of the trading time. This can be verified by studying any trading chart. You will realize that the big moves occur within a period of few weeks or days. Thus, you can generate more profits by taking advantage of these trading windows. This can be achieved by investing in the shares of the penny stock before an announcement of the news that is likely to benefit this stock.
More Trading Volume is an Indication of Higher Sustainability
When there is a realization of greater trading volume for a given price move, there are high chances of it to be sustainable. Being one of the big news in the penny stock market, the investors should note that when there is more investment in a move, the probabilities of the price change to be sustained are high. This is aided by the fact that purchase of a single share is a creation of trust in the underlying company.
It is Hard to Make Loss
The chances of preventing a penny stock loss are high compared to making up. A good case is where penny stock shares suffer a loss of 10%. Here, getting back to the pre-decline levels requires a recovery percentage of 11. Moreover, penny stock shares suffering a sink of 85% requires a recovery of 460% to attain their original value. The big news is that you have all the chances of preventing the likely losses by studying the rising and falling percentage of the given penny stocks.
Avoid Investing in the Penny Stocks Experiencing Rapid Rise
It is true that the increase in the penny stock prices is considered to be sustainable if it takes place within a long period of time. As a result, a quicker and rapid price increase has minimal chances of being sustainable. Thus, the big news for the penny stock investors is that the penny stocks with a gradual and sustained uptrend are the best for investment. However, the penny stocks with a rapid uptrend are the best for investors selling quickly. This is because the given stocks hold the associated gains for only a short period of time. But there are almost zero probabilities of the shares of these penny stocks with a rapid rise to keep on soaring.
If you are new to the penny stock market or you are a case who has been enjoying the risk investment opportunities associated with this market, the above big news is essential for you. It cant be a magic bullet to reap higher returns within a short period of time. After all, as a penny stock investor, you will always wish to be successful in every investment you make. If that is your aim, then put the above information into practice.