As the latest news in finance suggests, today, penny stocks are underestimated. However, it is a great way to raise the first money in the investing industry. Want to see how to trade penny stocks in the UK online? Read the information below.
Penny stocks are the cheapest small emerging shares with little value. Most often, they are used by scammers, which is why penny stocks are considered garbage stocks. Historically, it is believed that the value of such shares should not exceed two dollars. The minimum allowed value is one cent.
Novice investors invest their savings in similar cheap-cap stocks that can be sold or bought on the well-known NYSE and NASDAQ stock exchanges. However, it is a misconception to consider these stocks as penny stocks. Since in reality, they cost more than 1 cent.
Most often, their price ranges from one to five dollars per piece.
Why UK penny stocks aren’t so popular
The Securities and Exchange Commission of the United States of America argues that a penny stock can be attributed to any stock, the value of which is insignificant, but it cannot be more than $5. Experienced investors and even the world’s richest persons are wary of trading on the NYSE and NASDAQ precisely because of the large number of such stocks circulating there.
And due to the huge losses and fabulous profits that penny stocks can bring to their owner, this segment of stock trading is considered a world of wild and too risky investments. Hence the reputation of penny stocks – as a crazy adventure for an investor, not without scams and corruption.
Any penny stock is a high-risk investment. The main reasons for the emergence of risks are low liquidity and cost instability. According to analysts, penny stocks are constantly plagued by low liquidity. This is a very serious risk factor for investors, and therefore their sale, after even a small capitalization, can be very difficult.
How to trade penny shares in the UK online?
Not all investors are eager to invest in penny stocks. The reason for this is simply that stocks are too prone to change in price over short periods of time, and these indicators are not stable.