Trading Penny Stocks has become a lucrative arena for those looking to broaden their income by investing in high-risk shares traded less than $1 per stock. Whatever the reason be, never forget to consider the most important tips mentioned herein to avoid falling a victim of fraudulent and con artists that are on the run to get every penny out of your pocket. Here are some of them that you need to consider to avoid frauds:
1. The low trading volume of penny stocks – Those companies that usually do not have a high volume of penny stocks to raise capitals, do not seem to get interested in long term financing. As a result, it becomes exceptionally difficult to trade in low volumes because no visible trading pattern can be defined without company’s active indulgence into the trading matters. Be aware of these types of penny stocks could be the perfect choice for fraudsters and con artists to rip you off your precious hard-earned money.
2. Penny Stock Over the phone salesman – Never, in any way, under any circumstance give a positive response to over the phone salesmen that call you up and give you an opportunity to trade in penny stocks for a high volume of profits and revenues. Most of the times, these people are liars and professionals in ripping you off your investments. These people have zero credibility but are experts in convincing the potential investor to fall into their traps. These salesmen are exceptionally trained with provable arguments that could trick any layman in believing them. Avoid them at all costs and no matter how convincing they get, just ignore them and hang up the phone. Just think about it, would reliable companies use cheap methods of calling up potential investors to invest in their penny stocks? Never! So you should always resort to avoid these scammers.
3. Guaranteed high performance – Many penny stocks provide 100% guaranteed to go up. But, what these scammers do not tell you is that these stocks also fall with the same speed as they rise and are certainly to do so. There is no certainty for any penny stock for a guaranteed up or a guaranteed down. If someone promises you guaranteed returns on stocks, never fall into their trap. Instead, check for yourself on how reliable the company is by analyzing its past historical trading records and noticing the ups and downs in the stock. If you feel confident about it, then you can proceed with the investment.
4. Penny stocks with zero commission – There is no such thing as a free lunch in this world, dear potential investor/reader. So, avoid it at all costs. Even if you have heard of the term “Commission free penny stocks available!” it might be possible you heard it directly from the company. Whatever the source be, you have to be certain that companies DO charge commission that usually does not get noticed by a layman. These are in terms of service charges, or hidden costs included in stock fees but not disclosed to attract the new investor.
5. The hottest penny stock – Professional scammers in the field of the stock market are wise enough to widely fluctuate the prices of their stocks crossing the roof. These are those people that spread and flourish a rumor based upon disinformation released by the company to inflate the stock price as the rumor spreads from person to person over the entire trading floor and one that eventually becomes public. If you ever heard someone saying “Invest now, hottest penny stock for guaranteed returns”, then get away from it. Do not risk losing all of your money by these people.