There are easily more myths and misconceptions concerning penny stocks than virtually any other kind of stock or investment out there.
Penny stocks have become more well known to the average American largely because of Timothy Sykes, who famously became a millionaire in just a few months after investing twelve thousand dollars into penny stocks.
Subsequently, many people have gone into the penny stock trading business hoping to get rich, while many more have deliberately avoided it all together for fear of losing their money.
Regardless of where you personally stand on penny stocks, there are a variety of misconceptions out there, which can serve to either dissuade you from getting into trading to make money or on the flip side of things can cause you to lose money when you begin trading. Fortunately, we’re about to debunk the most significant misconceptions that are out there.
Here are the top misconceptions about penny stock trading:
Misconception #1: It’s Hard To Buy and Sell Penny Stocks
On the contrary, trading penny stocks has never been easier, especially when you conduct trading on the American Stock Exchange, NASDAQ, or NYSE. Several penny stocks will trade hundreds of thousands of shares a day, and buying and selling them is super simple.
Misconception #2: You Cannot Short Sell Penny Stocks
Yes you can. There are no rules from the SEC against short selling penny stocks. In fact, one of the keys to making money with penny stocks is through shorting the low priced stocks.
Misconception #3: The Shares Can’t Go Lower Than They Already Are
If you see a penny stock for around $0.25 a share, you may believe that it can’t possibly go any lower. But the truth is it can: sometimes, shares can fall to as low as almost $0.00, but then rebound greatly in the coming months (depending on the company).
Misconception #4: Penny Stocks Are Guaranteed To Make You Rich
Many of the people who get into penny stock trading do so because they are inspired by Timothy Sykes and believe they can become rich like he did. But the truth is, unless if you’re extremely lucky, penny stock trading is not a get rich quick scheme. A more realistic expectation will be for your shares to double or triple in value.
Misconception #5: Penny Stock Trading Is A Scam
While there certain are dishonest scam traders out there, penny stock trading itself is not a scam. In fact, so long as you stick to the reputable companies like the ones featured on the major stock exchanges, you should be on the safe side. Stick to legitimate up-and-coming companies with a promising feature and large revenue growth, and any concerns you had about penny stock trading being a scam will go away.
Misconceptions About Penny Stock Trading
All in all, these are the top misconceptions about penny stock trading. Hopefully, you now have a new perspective on trading penny stocks regardless of what your position on the matter was before.