A lot of business owners and entrepreneurs tend to consider investing their money for the growth and establishment of their start-up organizations. Other than that, a lot of individuals also focuses on investing money in some kind of trade or business to get a better and secure future. However, most people take it slow and easy by investing less amount of money. There are various ways where you can effectively invest money and expect high profits in return. Just like penny stock trading as Timothy Sykes believes.
Tim Sykes is a well-known penny stock trader who has successfully traded penny stocks for over 20 years. He guides individuals like himself to day trade and earn money through his exceptional training lessons.
If you are one of those confused people who are worrying about taking the first step, then stop worrying at all. We have a few great tips for you to contemplate and decide for yourself according to Timothy Sykes Reviews. Also, make sure that it is significantly important to educate and understand all the business tactics along with the industry you will dive into. Plan accordingly and do your complete research.
As we have mentioned the term penny stocking earlier. We would like to describe it more in this article. Moreover, we have mentioned some efficient ways to invest in them by taking help from Tim Sykes lessons and guidelines.
What is a Penny Stock?
Penny stocks are considered as a security issued by start-up companies and firms to the buyers, traders, and investors. The small companies trade their micro-cap stocks at low prices and low shares. The usual penny stock trading is dealt under 5 dollars in total and sometimes dealt for as low as a few cents as well. The Security and Exchange Commission of government states penny stocks to be an inexpensive item that holds greater rewards.
Unlike other stocks in the industry, penny stocks are traded through small exchange counters. Although some stocks are sold over bigger exchanges they hold their own requirements that include sharing stocks of millions of dollars or having the credit of around 10 dollars. The examples of bigger exchanges are:
As mentioned above, penny stock trading is held on small exchange platforms through electronic systems. These platforms have over the counter procedure that makes sure that stocks could be traded regularly or often. However, investors and traders stuck in several problems because of the lack of liquidity to sell their stocks at the best and increased market price.
Trading And Investing In Penny Stocks
The majority of people take low-value stocks and penny stocks into consideration to make a huge amount of profit by investing. Penny stock trading is a very logical and practical step towards making money easily but it requires a lot of patience and risk tolerance. The reason for choosing pennies to trade is because they carry a low share price between 1 dollar to 5 dollars.
However, several Timothy Sykes Reviews state that penny stocking is not for everyone. Although they have great attributes and profit they require smart ideas in order to make larger profits by investing a few pennies here and there. The benefits occur only when the demands and prices of stocks get higher in the market or industry. This is how small investments are turned into larger scales.
Furthermore, it is believed that investing in penny stocks is riskier and sometimes worthless. The reasons for these two concerns are stated below:
- When Bankrupt Companies Sell Shares Stock Becomes Worthless
Buying stocks and shares from a bankrupt company will make all the money go to waste. nIn any event where a company is publicly listed as bankrupt, the shareholders will be entitled to give a portion of their assets depending on all the shares and liquid assets they are left with. The company will also be required to sell out all their assets in order to pay off debt. Also, all their sold shares will become worthless once the company gets closed.
Suppose you buy stocks from a company that was not declared as bankrupt. You wait for the stock market to increase the price of stocks. In the process of waiting, the company is listed on the bankruptcy list then all of your wait and investment will be lost. This is one of the disadvantages of penny stock trading where huge risk is involved.
- When Stock Value Decreases Then A Trader Faces Loss In Trading
Another reason where the risk factor is involved is when the stock gets expired and their value does not increase in the stock market industry. This is where an individual faces loss as they have to sell out their stock before its expiration and without waiting any further for the stock market increase.
A stock expires when the contract does. All contracts including the put contract have an expiration date. Having said, risks are involved in every business or trading. Once you start investing and trading, make sure to have strategic planning and high-risk tolerance while expecting big rewards.
To reduce the chances of this loss, a trader should educate themselves on the technical analysis of 52 weeks high/low strategy.
What Does 52 Week High Low Strategy Mean?
It is recommended that new investors and traders should focus on the 52 weeks high/low factor that will help them determine the right time to sell their shares for a profit. They will be able to reduce their loss percentage.
This factor is considered as a technical indicator of comparing the prices of stocks from previous years with the current value of stocks. It shows the highest and lowest price at which the stocks were traded in the last year. Many famous penny stock traders tend to wait for the right time through predicting the future price increments.
The stock is traded between the 52 weeks price range. This means it is traded between 52 weeks high and 52 weeks low which helps the investors to plan when to put their stocks on sale. However, the risk is still there as this strategy does not confirm the exact prices but only helps in giving some perspective on market conditions.