Hot Penny Stocks 2012 - Start Gaining from Trading the Hot Penny Stocks Below $5
They are highly speculative and have a very high risk factor but they also have the potential for a person making a huge profit within a very short period of time.
Some of the risks that people investing in penny stocks face are price manipulations also known as "pumping", low liquidity and sale of chop stocks. Low liquidity means that the person holding the stocks usually has problems offloading them or selling them to others. As a result of this they are quite prone to price manipulations by people with vested interests.
People who are holding large amounts of penny stocks that are not doing too well in a particular company and are looking to sell them sometimes decide to create false impression of the companies' performance so as to improve the price of the stocks. Once they have achieved the desired effects and the prices of their stocks have gone up they then sell at the inflated prices. This strategy is known as "pump and dump".
The strategy had increasingly become easy with the use of social media which made it easier for people to spread false positive information regarding certain stocks with the aim of raising their prices. However there are new regulations regarding penny stocks that have helped minimize these risks making them even more attractive for all types of investors, the internet has also helped eliminate spam mail further reducing the risks.
Despite these risks the potential for making a huge profit makes penny stocks attractive and worth investing in so long as one takes some time to research on which stocks are legitimate and good and which ones are not. This can be done by identifying the companies one is interested in and then following their activities for some period of time from a few weeks or several months until one feels certain that they are making the right choice. It is also helpful to compare stocks one's preferred company with competing companies stocks before making the final decision.
To get hot penny stocks for 2012 one needs to first do some market research or use the services of a newsletter featuring hot penny stocks for the year 2012, combining the two options offers one the best chance of getting the best deal possible. One should look at all aspects of the company one is interested in and sample their products and if there are no signs of trouble or weaknesses then one can consider investing in the company's shares.
Penny stocks offer potential investors a chance to deal in stocks of small companies which are still growing.
Since even hot penny stocks cost little they are a great investment for people who do not feel quite ready to deal with big companies, at the same time they allow first time investors a chance to experiment with the stock market by buying shares that are lowly priced and therefore require lower capital as they gain sufficient experience to invest in larger companies.