Your main work when utilizing this method is to find out why a confident Penny Stock Trading is at such a low share price. You have to suppose in your chosen stock, that even though the bad times it can still soar in the future trading.
Stocks On Over-The-Counter Markets and Pink sheetOn over-the-counter (OTC) markets and crimson Sheets you won’t find companies that were once big but have fallen from grace. These penny stocks are more often than not, actually small startups with a share price below $5. There are thousands of them, and you cannot ignore the research essential to filter out that 90 % of them which are useless. OTC penny stocks have other kinds of risks in general.
They are tremendously illiquid. Not many shares are traded on a daily basis, so if you buy a stock on an OTC market, later you may find yourself in a position that you, on the whole, cannot sell it for profit, because of the low volume and a large spread between the bid and the asking price. You won’t be able to find a buyer.The other risk is that the great majority of stocks on OTC markets are actually low quality, junk stocks and only a few of them are significance further research. Knowing how to find the good ones is the key point.
Second Thing Ride The Pump And DumpThis is incontestably the most dangerous approach. Penny stock trading gets all the bad press first and foremost because of the pump-and-dump schemes.
Pump-and-dump is a very common and unprincipled (even criminal) activity where scammers buy up the preponderance of shares of a low excellence OTC penny stock, and then they promote it heavily, so that gullible investors buy the stock too, thereby driving up the share price. When the stock price has rocketed, the fraudsters basically sell their shares, cause the instantaneous collapse of the share price, leaving the investors with a worthless penny stock, not capable of recovering.
The question then is can you profit exploit this fraudulent activity. There are two ways. The first way is almost certainly unethical, but the second way will make you the king of penny stock trading marketing.
The first method is to identify a pump-and-dump scheme as early as possible and get in while the share price is still rising. Yet more prominently, you will have to get out previous to the share price collapse. In other words, you are doing exactly what the scammers are doing with the stock, only with much less in order. This, of course, is a very risky strategy, and in all probability an unethical one, because – if you are winning – you are clearly taking the money from the wounded of the scam.