Penny Stocks, Massive Gains and Trading to Win Big

 Although penny stocks don't cost a penny any more they still hold a lot of potential for new traders trying to make money on the stock market. While penny stocks have been around for a long time, they became really popular in the mid 1990's when the so called dot com boom took over Wall Street.




This dot com phenomenon was known as the Penny Express. A lot of money was made at either end of these trades. For aspiring entrepreneurs, they turned to the OTCBB to get venture capital and to get their ideas off the ground. Often these companies went from 10 cents a stocks to ten dollars a stock overnight - the kinds of returns that most traders only dream about.


While this propelled a lot of entrepreneurs into massive wealth, traders got on the bandwagon as well. While most of them would normally shy away from penny stocks, they now jumped unto it with open arms, embracing it as the biggest opportunity in decades.


Unfortunately the whole dot com boom came to a sad end as many market experts predicted. Even though some companies survived, most were wiped out. The one good thing that was left over was a renewed interest in penny stock investing. Traditionally penny stocks was way for aspiring companies to get on the map and to find the capital to bring their ideas to life.


When all goes well, these stocks can turn into blue chip stocks. When it all goes pear shaped, these stocks become worthless and the company disappears faster than you can say "penny". When investing in penny stocks the secret is to know the risk and to hedge against potential losses. Even though you can make huge gains that you will never make on the major exchanges, the risk is there and something you need to be very careful of.


Despite the risk, the reward is a great incentive to learn how to trade penny stocks. They can give the "small guy" massive leaverage when trading and without spending your life savings you can make some decent returns. The key thing is to know what you are doing and to apply basic trading principle without getting swept away with greed and the blinding promise of 1000% returns.

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