What are Penny Stocks? Understanding Best Penny Stocks in India

4 min read

You may have heard the term penny stocks, but you are not sure what they are. They are not the same as stocks that are" penny" stock trading.

What are penny stocks? Are they good to invest in? The terms" stock"," stock trading", and" stock request" are frequently used interchangeably. This is because all of them relate to individual stocks or stocks in general. Penny stocks can be considered feasible investments in certain circumstances.

Want to know more, read penny stock list

Understanding Penny Stocks in India
Penny stocks in India are the stocks that are traded at a low price and volume. The minimal price of penny stocks in India isRs.0.01. Penny stocks in India are traded on the NSE and the BSE.

Penny stocks, because of their low price, are used to get trading experience for new dealers. These stocks are veritably low priced, and it's nearly threat-free to try your luck with penny stock trading.

Penny stocks are relatively popular with small investors because of their eventuality for huge earnings. The earnings may be in the range of 300 to 500 or indeed advanced. Indeed if you have a small investment of Rs 100/-, you can still gain up to Rs 500/- profit.

In India, these can be defined as shares of companies whose request capitalisation value is lower thanRs. 10 Crore. These stocks have a huge eventuality for investors if they've access to the correct information and support, but there are several pitfalls involved.

How to spot a implicit penny stock?
Penny stocks are considered shares of low value($0.01/ share) traded on untoward bulletin boards. Unlike regular trading, investors don't buy these securities from the company itself but brokers or dealers. These dealers make a profit by marking up the price of the stock they're dealing to you. therefore, they're also known as' marketers'.
Penny stocks are generally quoted with two different prices – shot price and ask price. The shot price is the price at which a dealer is willing to buy the security from you, while the asking price is when a dealer will vend you that security. The difference between these prices is called the spread, and it varies with different penny stocks.

The spread indicates how precious or cheap a penny stock is being traded. The wider the spread, the more precious it's for investors to buy them, which might restate into advanced pitfalls for investors who hope to gain from price appreciation of these securities.
Because of the threat involved with penny stocks, some investors do not suppose it's worth buying shares in them. Others argue they are fine if you know what you are doing and have the time to cover your investments precisely.

There is no sure way to tell which penny stocks will come big winners and which bones will go bust, but there are some signs that might help you spot a implicit winner or clunker.
The stylish way to identify a implicit penny stock in India is to probe the company and its current status. You should also learn about the trends in the assiduity and how they affect this company specifically.

Eventually, you should look at what companies have done in the history that were successful with penny stocks and mimic their styles if possible. This isn't an easy task, but it can pay off big time if done rightly.

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