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Can you get rich from penny stocks?
The question should rather be, can you make money from penny stocks. Getting rich from penny stocks is something that doesn't happen often, yet there have been cases where people have gained a significant amount of profit. A good example would be the Monster beverage company. By 2004, a stock had a price of $0.12. Today, the price of shares in the Monster beverage company had grown by over 60,000%. Thus, people who invested in these penny stocks over a decade ago now have significant profits to enjoy.
This is, however, quite a rare case. Most people who invest in penny stocks will only gain a small amount of profit if any. This does not mean it is not profitable. If you do your research and invest in the right companies, you could still profit. The goal would be to find those companies that have the most potential to grow - and to get stock while the prices are still low.
How do I buy my first stock?
Stock trading is not something you should jump into blindly. You can easily lose your entire investment - as many other people have experienced first hand in the past. If you are looking to buy your first stock, then education should be a priority. Make sure you educate yourself on how stock trading works and get access to the right tools. A good idea is also to get a demo account up and use that to do stock trading for a while. Use the demo account while you are educating yourself - up to the point where you understand how to make more accurate predictions.
Once you are ready to buy stocks with real money, ensure you sign up with a trusted broker. Don’t invest too much. Experts generally advise beginners to never invest more than they can afford to lose.
How much should I invest?
One of the most common questions related to stock trading and investing is how much to start with. Some people would advise you to start out with over $1,000, while others may suggest an amount of about $200.
Truth is, you can start with any amount you feel comfortable with. There is no set minimum. Some of the top traders started out with just a minimal investment, then worked their way up from there. It is possible to trade and profit with a small investment. The profits will just be small at first - but if you do your homework and make successful trades, your profits can be used to increase your investments.
With this in mind, you should decide how much you can invest. Some companies offer low minimum deposits - sometimes as low as $10. While this seems insignificant to an expert trader who has already made their one-million mark, it can still be something for you to start with.
Is stock trading risky?
As with any other type of trading opportunity, buying and selling stock does come with risks. The specific level of risk you take on depends on a couple of factors. Finding a reputable company can help to lower your risk, as they will usually offer you analytical tools, as well as quality education.
Overall, make sure you understand that there will always be a risk of losing your investment. Stock prices can plummet overnight - but there is also the chance that these prices could increase just as quickly. Thus, it is a risky trade but worthy for some people.