Penny Stock Trading Versus Penny Stock Investing
It's a widespread slip. So many investors have a tendency to use investing and trading interchangeably, but
they are not the same thing. The objectives of engaging in penny stock trading are extremely different than
those of penny stock investing.
The difference between them can be explained very simply:
Penny Stock Trading
A stock trader is anyone who buys and sells stock for a very short time period--it could be five seconds or
five days.
The goal of the stock trader isn't to plant dollars into some stock, water it and pray it'll one day grow tenfold.
The goal is to generate some cash and get out--to play the swings.
A penny stock trader is betting on the swings--the ups and downs in the price of the stock. A penny stock
with high instability is great. It doesn't matter if a stock started at $1 on Monday and ended at $1 on Friday
as long as it skipped around in the meantime.
Penny Stock Investing
Unlike the trader, the penny stock investor will purchase a stock and hold onto it for a longer period--it
might be a few months or years even, hopeful to achieve a gain in value over time.
The goal of the stock investor is to choose a stock and watch it grow to something higher. For example, if
the purchased penny stock was $1 per share now and $1.50 per share in five months, the investor is happy.
The investor keeps the stock the whole time and consequently all that matters is the price tag and the final
selling price and not what is occurrring during the two.
On the whole, those who buy penny stocks are most likely traders--purchasing stock at $1 today and cashing
out for $1.15 tomorrow and re-purchasing at $1 the subsequent day. Whether you're a penny stock trader or
investor, penny stocks present an excellent probability for profit.
stock prices