There are many arguments in terms of penny stocks. The majority of penny stocks are worthless and there is absolutely no doubt about it. About 97% of the penny stocks are worthless and fail for different reasons. These stocks belong to small companies incapable of getting from the ground due to inadequate finances, resources and management. Hence, it is essential to find the pearls and recognize the right companies, which can help in making you attain higher returns.
Penny stock investments are risky as the stocks are highly volatile than the established stocks. However, the risk factor is not only for the case of penny stocks. There are many large company stocks, which can also prove out to be failure. However, the loss to big investors have lesser chances as the market crashes are too less in the case of blue chips. In case of penny stocks, it is worth noticing that these stocks don’t lie on major stock exchanges and hence, the risk factor is on higher side. When the companies don’t perform great, there can be losses for the investors. The share price may drop or increase within short intervals and this is the major reason for unpredictability of the stocks.
The important point is to find out the right ways in making your selection for the right penny stocks. Trading can’t be done in isolation and investors do require outside help to find out the most reliable stocks. You need to acquire knowledge about the interesting stocks and the broad trends on the stock market. Always buy at the right time and also, sell the stocks if you feel that they are not going to do better. There are more of short term investments made in nano stocks and you can select the best companies having good prospects to get best leads for investment.