For traders and stock enthusiasts, a stock price that is under one dollar is truly enticing to trade. Many are drawn to this kind of stock because of its price. Simply imagine getting more shares because of its value. Stocks that are under one dollar are called penny stocks. This by definition is a small cap company that trades just under $5 per share.
In spite of its enticing price before even buying stocks of such value, there are still facts that you need to take note.
Advantages of Trading Stocks Under One Dollar
There’s a lot of opportunity to see when trading stocks below one dollar value. This is because this receives little to no coverage by many analysts in Wall Street. However, because of this, expect great volatility. A good example would be the UBI Blockchain Internet LTD which was trading just $0.55 per share last February 3, 2017. In less than 8 months, its value surged to $115 per share. If you were lucky enough to buy $1K work of stock when it was just below a dollar and sold it on December 15, you would reap over $200K in profits. Because of this volatility, many are drawn to trade such kind of stocks.
Stocks of this value fly since these companies are not owned by mutual funds and hedge funds. They don’t get the same media mileage and goes unnoticed. This is an opportunity for savvy traders to penetrate and play the market.
Disadvantages of Trading Stocks Under One Dollar
Because no media attention is given to this kind of companies, expect that you will do a lot of research on your end. You might find little to no headlines about such companies. There are however groups that focuses on these penny stocks that you can join. However, you need to be cautious since many of them are not qualified to give stock recommendations. Information from this type of companies are course through press releases. You need to be always on your toes to read this as this is how information is disseminated. If you are new to the stock market arena, doing penny stocks is often not suggested because of its volatility. However, if your risk appetite is high, you can opt to have a small percentage of these Stocks Under One Dollar in your portfolio.
Finding Stocks Under One Dollar
Finding stocks of this value is relatively easy. Oftentimes, these are the stocks that tend to change a lot in the course of the day. These are considered the “in-play”. You can also read and follow trends. If you happen to bump into a stock that has an explosive move, look for similar companies and buy a few lots.
Some of these stocks can be your key towards greater profit. This is very much similar to the UBI Blockchain Internet LTD story. However, as previously stated, the price can be enticing but you also need to consider its volatility. Trading this kind of stock is not for everyone. Know your risk appetite and know your trading goals.