How is Trading in Penny Shares Different than Regular Stocks?
The biggest differences the trader needs to know are: • Larger Spread – The bid/ask price on penny stocks tend to be a much larger percentage than on regular stocks. This is due to the low volume and minimum variation between prices. 5 cents of a $10 stock is only 0.5% versus 5% of a $1 stock. • More Easily Manipulated – You may have worked a good system out, unfortunately unscrupulous people can more easily manipulated a small cap stock. With low volume a small surge of money can change the price quickly without reason – or even clever marketing schemes. • More Volatility – The above reasons create a wilder ride that may make it difficult to find a method that is consistent. It also just may be too emotionally hard to maintain your system. For the investor the lack of media coverage and government regulation makes it difficult to trust information you come across. Without meaningful information (inside knowledge) I would strongly suggest fundamental investors to stay clear of the penn
