So, following the examples, people think that every penny stock will deliver the skyrocket return in the future. It is quite true but only three out of every 1000 penny stocks have delivered positive returns to investors. Many retail investors lose millions of money by trading or investing in penny stocks. In this column, we will discuss whether an investor should invest in penny stocks, the strategy to pick the best penny stocks & Top 10 penny stocks to buy in India.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n First of all, let\u2019s understand what penny stock is. Penny stocks are defined as those stocks which trade at a very low price i.e. Rs. 10 or Rs. 5 or less. These companies possess very low market capitalization. These penny stocks do not fit the stringent regulations by the major stock exchanges like NSE, BSE, Nasdaq, etc. Penny stocks have a very low trading volume with low liquidity or a lack of liquidity.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Penny stocks carry some risk with them. The risk associated with the investment in penny stocks are as follows,<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Penny stocks show extreme price volatility of 50% to even 100% in a single trading session of one day. You may find that many penny stocks jump to 500% within one year and many correct up to 500% within one year. Due to their check price they can easily be manipulated. But without any proper information and analysis i.e. business model, sales margin, profit margin, market cap, etc. you cannot predict the future of a penny stock. There are only two possibilities left. The first one is you may become a millionaire or go bankrupt.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Penny stocks have a low trading volume. Let\u2019s make it clear with an example. Suppose, you possess 1000 shares of a particular penny stock with an average buying price of Rs. 2. Now, within one year the penny stock has delivered 400% return and is now trading at Rs. 8\/-. So, you decide to book the profit by selling your 500 shares. Here you will face the problem. The yearly trading volume of the penny stock is only 100. So, to whom you will sell your shares if there is no one to buy that large quantity of shares.<\/span>\u00a0<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Many retail investors remain in search of penny stocks that will give multi-bagger returns in the future like Symphony or Minda Industries etc. In order to pick the best penny stocks to buy retail investors should consider the following points.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n In order to make the investment in penny stocks here are some suggestions.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n If you want to invest Rs. 1 lakh in the stock market, you can invest a maximum of 5% i.e. Rs. 5000\/- in penny stocks.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n You can buy those penny stocks which have a large trading volume. If you invest penny stocks with large trading volume then you can sell your share i.e. offload them at once.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n The making of an average concept cannot apply in the case of penny stocks. Suppose you buy 1000 shares of a penny stock at the price of Rs. 5. Then after a one-year price goes down to Rs. 2. In that situation do not put more money to buy more shares in order to bring an average. The best strategy is that you should sell that share whenever the price of the penny stock shows a spike.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Once you have gained 50% or more from a penny stock, do not wait for more. Just sell your shares. A penny stock takes no time to decline from its 52 weeks high to 52 week low.<\/span><\/p>\r\n Note: This is the few lessons from the book which I discovered from Timothy Sykes\u2019s<\/em>\u00a0brilliant book\u00a0\u2018<\/span><\/em>Penny Stock Conspiracy<\/a>‘.<\/span><\/span><\/p>\r\n<\/blockquote>\r\n Are you confused about how to prepare an effective financial plan to achieve financial freedom? If yes, learn\u00a0how to prepare effective financial planning<\/a>.<\/span><\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n If you have any questions regarding the top 10 penny stocks to buy in India feel free to comment so that we have a discussion. If you found this post helpful don\u2019t forget to share this post.<\/span><\/p>\r\n <\/p>","protected":false},"excerpt":{"rendered":" Many retail investors have a common perception that what penny stock is today will be the multi-bagger stock in the future. This is because once symphony was considered a penny stock and traded at Rs. 5\/- in 2000. Now symphony … <\/p>\n![\"Penny](\"http:\/\/capitalante.com\/wp-content\/uploads\/2019\/01\/Penny-Stocks-to-buy-Stock-Delivered-Multibagger-return.png\")
<\/a><\/figure>\r\n<\/div>\r\nWhat is penny stocks<\/strong><\/span><\/h2>\r\n
Risks associated with Penny stocks<\/strong><\/span><\/h2>\r\n
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Top 10 Penny Stocks to buy in India<\/strong><\/span><\/h2>\r\n
<\/a><\/span><\/figure>\r\nPoints to Consider while buying Penny stocks<\/strong><\/span><\/h2>\r\n
Don\u2019t invest a large amount<\/strong><\/span><\/h3>\r\n
Invest only in 10 penny stocks with a large volume<\/strong><\/span><\/h3>\r\n
Don\u2019t try to average your purchases<\/strong><\/span><\/h3>\r\n
Sell quickly<\/strong><\/span><\/h3>\r\n
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How Capitalante can help you<\/strong><\/span><\/h3>\r\n
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