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Why There's FAR More Profit Potential In Penny Stocks Than In Other Stocks

It is quite common for penny stocks (also called pennies) to increase 50% - 100% in a single day. In fact, you'll see a 1000% increase with pennies often enough that, although people do talk about it when this happens, it isn't shocking. You'll never see this type of increase with mid caps and large caps that trade on the NYSE and NASDEQ. In fact, you won't see this with small caps that trade in the penny stock range (less than $5/share) either. The biggest single day gainer for a stock that is not a penny stock was on April 18, 2008. That day, the search engine behemoth Google rose 20%. This was such BIG news that people are STILL talking about it but in the penny stock world, a 20% increase is so common it would have barely registered as news for a single day. See the difference in profit potential?!

So, WHY do penny stocks have so much more potential for profit than other stocks?

Penny stocks trade with more volatility than other stocks and they have far more upside. If you have a method of identifying these pennies with good business fundamentals and a solid potential for growth, the profit you can achieve is truly amazing. What's even more amazing is how quickly this can happen. I've made thousands of dollars in a single day with a relatively small investment. Companies that trade at higher stock prices and with larger market caps are usually at a different stage of development than companies that trade as penny stocks. While the more mature companies may provide an investor with steady growth over the span of many years, they do not have the same potential to skyrocket in price the way the pennies can.

If you are interested in a very large profits over a short span of time, you'll need to trade penny stocks.

Here's another reason a penny stock can make a sudden and very dramatic jump in price in contrast to other stocks. American companies that trade above $5/share with large market caps almost always trade on the NSYE and the NASDEQ - and to a lesser extent on the AMEX. These are sometimes referred to as the "big boards" and with this privilege, they are required to submit all sorts of financial reports. They are constantly under the microscope and scrutinized by every financial institution out there. Financial experts pour over their financial reports and every single detail is discussed ad nauseum on cable financial shows, internet finance sites, and in other venues. NOTHING stays hidden for even a day. Stocks will tick up and down depending on every detail that comes out, as it comes out.

With penny stocks, there aren't anywhere near as many people analyzing them. They are not required to file as many reports and sometimes these lessor known and lessor scrutinized companies are busy making plans that no one notices. Then all of a sudden the news comes out and the stock price skyrockets. The trick to make good money with penny stocks is to buy the stock just before this happens but trying to do this yourself is very difficult, if not impossible.

It takes a very special sort of person to sniff out this type of news before anyone else finds out about it - and to differentiate the difference between pennies that is about to skyrocket in price due to something REAL versus a planned pump and dump scam (don't even try to outsmart these scamsters - you'll never win!) These people have a natural ability to act like investigative reporters in researching penny stock companies. They best penny stocks
have an uncanny ability to get at information through a backdoor that no one else knows about.

There are a few of these types of individuals that offer a premium service where they will send you their best picks for penny stocks that are about to skyrocket in price. I subscribe to some of these services and I can tell you this is by far the easiest way to make really good money with penny stocks. Although there are many supposed "free" services that will send you free picks, I have found they are essentially useless and will just waste your time or worse. In fact, they are often pump and dump scams that will end up costing you severely if you actually trade them.