When it comes to penny stocks there are several schools of thought. Some maintain that it is possible to make large sums with these types of simple investments while others tend to see them as little more than cleverly designed traps used to part investors with their capital. Regardless of how you personally view penny stocks, the fact remains that they are something of a “mixed bag”. In other words, as with any other type of investment, there are most certainly going to be winners and losers. Your goal of course, is to be on the good side of the trade, no surprise there.
Seeing things in this light, perhaps it would be more prudent to ask the question – how does one go about making money from penny shares? You have to realize that these types of listings are included in OTCBB (or Over the Counter Bulletin Board) securities / equities because their respective companies might have not met certain standards to be featured on a major exchange. Similarly, these same businesses might not offer up as much information to boards as required, or perhaps lack a traditional history of market activity entirely.
Naturally, all of the above factors are important when it comes to investing because it is this same information that allows both the public at large (as well as the investors) to more accurately price their overall value. There are always exceptions too, like in the cases where some unknown company is set to take some new product or technology to the market which will soon sweep the globe, dramatically increasing in demand. Of course the truth is that these types of situations rarely occur (if at all).
Having said that, you’d have to be a fool not to realize that there are people out there who utilize the penny stock markets for nefarious purposes. Offshore brokering and other types of setups which involve larger corporations paying for what amounts to “advertising” for owned or leveraged penny stocks are just two examples of the many tactics which are said to be employed. In such instances it’s entirely within reason to relegate these types of stocks to junk status, little more than a more sophisticated form of “playing the lottery”.
Certain key penny shares might increase by certain small percentage amounts, netting their investors a small, but one really shouldn’t expect profound results over the short term. Given this, perhaps the best advice on penny stocks is to simply say that you either need valuable information / working knowledge of the viability of a company (and their assets, including future potentialities), or you need to concentrate on pulling off simultaneous trades. In other words, it is probably feasible to tally together many individual small profit gains from multiple penny share purchases in order to net heftier sums.