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Mike Samii
Mike Samii
I am a Cordon Bleu Chef, Food and Wine Consultant, Author, Motivational and Public Speaker and a Life Success Coach

3 Advantages of Trading in Penny Stocks

Jan. 24, 2010 1:25 pm

Depending on what type of person you are, as a trader you will always develop a style that matches your personality.

But no matter whether you are conservative or a risk taker, penny stocks can be an ideal means for you to make money.

The 3 advantages of trading in penny stocks are:

1. They are as the name suggests worth only pennies each, so the potential for an upswing is always high, and so is the return on investment.

2. Because they are cheap to begin with, you really do not need to make large investments, specially when you are a new trader.

3. They can be an ideal secondary source of income.

Well, number one when deciding on a stock after following the trend charts and reading about the background of the company the stock represents, even if by some minute chance you make a mistake on your investment, since you bought the stocks at only pennies each, your loss is always at minimal, if any. This is because when you buy a stock for just a few pennies, the potential of the stock value going down is a lot lower than the other way around!

Number two, you do not need to come up with thousands of dollars to invest as the value of each stock is only pennies. Usually just a couple of hundred dollars is sufficient, unless you want to make larger investment on a favorite stock. But that is always a personal choice.

Number three, because they do not require substantial amount of money to invest in, if your budget is limited, you will still have investment money left over to invest in other things. So, penny stocks are ideal low risk investments that can become a secondary source of income.

Remember, with all that said, like any other investment these stocks carry a certain amount of risk. If you are a logical investor and depend on mathematical formulas to make an investment, then visit As any successful trader will tell you, buy low, sell high, and with penny stocks you usually can not buy any lower!

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