Many people ask what the difference is between a penny stock and a microcapital. The answer is simple, they are both stocks that typically sell for less than five dollars, and most are sold for pennies.
There’s really no official deadline for microcapital and penny stocks, actually, which are, and which won’t depend on who you ask. Each trader will have a different set of criteria for deciding whether stocks are “retirement stocks” or “microcopic” or not.
But whatever you call them, they are usually defined by three things. (1) the price per share, (2) the market in which the shares are traded, and (3) the market capitalization of the company.
Of course, you will find some variations of each of these factors. In some cases, some brokerage firms will treat all shares of companies with a certain market capitalization as pennies. They usually sell for less than $ 5.
No matter what you call them both are high risk. Their appeal is that they can bring high rewards for the small amount of money you will use to trade them. But you have to study these stocks carefully.
You need to make sure you understand that it is easy to lose all your money. Microcap / Penny stocks can be volatile and very unpredictable. But with good planning, you can quickly make money on these stocks.
It is recommended to get a very good, reputable service to collect shares with micro-capital / interest, which will conduct the necessary research for these shares of small companies that have not yet been tested. This way you can limit your chances of losing money and greatly increase your chances of having to do with them very well. These services do all the research for you, and the good ones will give you realistic entry and exit points.
Microcap shares / pennies can be profitable in the right hands. Because they are usually from small and largely untested companies, they can be purchased at bargain prices. If the company suddenly has a surge in growth, you are not only under a huge rise in prices, but also just made a big profit.