There has been a tremendous increase in demand to buy large volumes of penny stock among the world's new investors. With the hope of selling them at a huge profit, they buy. Since these stocks of micro caps sell at less than $ 5 over the counter or OTC, many people join the bandwagon, In the hope of becoming rich in a short span of time by trading in shares selling for just a few cents or more. You can actually buy large volumes of a potentially hot penny stock for the same amount with which you can buy one or two large cap shares. Unfortunately, the gold rush to buy and sell large-volume cheap penny stocks after making a large profit of as much as 200 percent to 1000 percent in terms of value in weeks has made many new investors totally penniless due to investment that went wrong based on perhaps false information and rumor.Then why does this happen, when the stock market is full of promises and newspapers, people on television are seen talking so much about a particular stock full of promise. They invariably fail to exercise caution in their excitement, even though some experts and sometimes their wife / girl friend or mother vehemently warned against heavily investing in a single penny stock. They are absolutely correct and you ought to have listened to their warnings. By buying stocks from not just a single company, you should have invested wisely, although it may have been placed at the top priority of the hot list. A portfolio of four or five different types of shares of different companies should have been built.In my opinion, you should never spend more than 10% of your total investment buying a particular small cap company's penny stock shares, however tempting it might be for you to buy just a few more of the same. Well, it only happens if you act instinctually and not rationally. Although tempting penny stocks can actually lead many people to financial doom unless you have a master plan, a strategy to explore a relatively new treasure-filled territory that exists in an extremely volatile financial environment.

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