Penny stocks don’t generally appear on most major exchanges, but that doesn’t mean they can’t make for worthwhile investments. With that in mind, are penny stocks worth it in 2021? Here’s the lowdown on the risky business of penny stock trading.
Are penny stocks a good investment? (2021)
Penny stocks are cheap, though often risky investments. They can make traders a lot of money, but just as easily incur a massive loss. In order to identify a good penny stock investment, traders must do their research into why a company is selling its stock at a bargain price and if there’s a good chance of recovery.
Plainly, no business wants to sell its stock cheap — doing so is often an indicator of desperation. Many companies in this predicament do not recover, which makes investing a high risk. Others, however, have contingency plans in place and can go on to prosper. In this situation, penny stock traders will profit alongside the company. These instances are somewhat of an exception to the rule, yet far from unheard of.
In essence, penny stock investors play a very risky game. It’s often an all-or-nothing situation that can lead to big gains and/or losses, making it a more volatile process than trading more expensive stock on mainstream exchanges. That’s appealing to some and understandably offputting to others; resultingly, whether or not penny stocks are worth it is down to each individual trader and their threshold for risk-taking.
Penny stocks are kind of like cryptocurrency, in terms of unpredictable volatility. Take Dogecoin (DOGE), for example — once the king of meme crypto, many now (prematurely) believe that it’s dead. The same goes for Litecoin (LTC), one of the biggest currencies that has now fallen on hard times.
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