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What about the Penny Stocks?

The Penny Stocks are shares that are traded at a relatively low price, low to less than US $ 5, as well as companies with a market capitalization (number of shares for price quote). It is important to note that the vast majority of these penny shares are traded in markets outside of regulated exchanges, i.e., the OTC (Over The Counter for its acronym in English), these markets are markets highly speculative and lacking in liquidity.

It is very important to always check the volumes of trading in these products before deciding to invest, since many of these do not have one sufficient volume on a daily basis that will allow investors and traders leave their positions once for example they bought the shares, literally will not have to sell them when you decide to close the position, this can be a trade winner in one loser, so important is the volume.

The penny stocks have become very attractive investment destination because of the big returns that can offer the winning trades in this market, but you must be very careful, not to be a regulated market lends itself to that happen over manipulations as the pumps & dumps, this consists of increasing the price artificially promoting the action (increasing the number of buyers), meaning that they hire a “promoters” who call, search and mislead investors fewer experts with promises of extraordinary results in a short time by buying a “new action” which is expected to be a “success” in the short term, they use all kinds of excuses to convince you to buy these shares. Once the price is sufficiently high who hired promoters, who usually have the greatest amount of available shares, sell all the shares that have at this high price, pulling incredible profits, but at the same time plummeting price due to the sudden and huge increase in the supply (sellers) leaving investors unwary with actions that are not worth even half of what they paid.

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