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Tuesday, May 17, 2011

What are Penny stocks?

Penny stocks are generally low price, low Market cap and highly illiquid stocks. Dealing with such stocks is very risky as much speculation prevails in their trading.
As liquidity is low there is often high bid-ask spread.
Buying such penny stocks is very risky but sometimes rewards are very lucrative.
There are often wild movements on either sides in penny stocks due to speculative actions and sometimes Risk taking investor gets benefitted when stock goes upwards.

Some relatively low risk penny stocks with lesser volatility I came across are- BirlaCot and BirlaPower.


 NB: Though I have mentioned penny stocks with minimal risk still buying penny stocks is a risky proposition and only investors with 'High Risk High Gain' attitude should go for it.


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