For a penny stock investor, the cost isn't all that matters when it comes to choosing what company you wish to invest with. Just because it costs less than a dollar apiece doesn't mean the trader wants to choose penny stocks that won't yield an investment return.
One factor that a penny stock investor is looking for when he's evaluating which company's stocks to trade in is the expectation of its performance in the marketplace. Knowing how will the market's investors react to this particular stock will play an important role in whether the investor gains or loses on their original investment.
Much of the expectations are based on news that comes about in regards to a company's financial forecast and growth. If news hits the market and a penny stock's value rises slowly throughout the day, then it can be a strong projection that this particular penny stock is a worthwhile investment.
Slow, gradual growth of a penny stock's value usually means it has the potential to triple or quadruple its value quickly and easily. On the other hand, when a penny stock shoots up in value right when the market opens, it can be wise to stave off your desire to invest in it until you see if it's going to drop back down.
Sometimes penny stocks with a surge in value early on wind up plummeting back down to its original value, if not lower than what it was on opening. This gives you the perfect opportunity to invest in this particular penny stock and save yourself the risk of losing your investment from false demand.
Some investors who turn their noses up at penny stock investing will consider dabbling in it if they find a company that shows amazing promise and happens to offer penny stocks as their only trading capacity.
Penny stock investing gives you the chance to make a bundle using very little initial start-up cash, which is another major factor in what makes them attractive to beginners getting used to their sea legs in the world of trading.
As unpredictable as they can be, penny stocks are attractive because of the thrill of the possibility that you could choose a company whose stocks result in major financial gains for you, boosting your confidence as an investor hoping to achieve security and stability.
It's a little more feasible than playing the lottery, and millions of people spend a portion of every paycheck on lottery tickets. With penny stocks, you get more than a mere chance at success – you can look at the qualities that make a certain stock attractive and then decide based on those qualities whether or not you want to take the risk.