Diversification in Penny Stock Trading

Many people want to participate in the stock market but simply cannot accumulate enough capital to participate. Purchasing cheap stocks can be a reasonable alternative for people without a lot of money who want to be involved in the stock market. While individuals with large brokerage accounts do not have difficulty in day trading stocks, many individuals who would like to invest in the market simply do not have those financial resources.

Blue chip companies, those whose names you recognize that make up the top companies whose success and failure we are all accustomed to watching on stock market reports, can require you to have thousands of dollars to buy merely one hundred shares.

And waiting for those one hundred shares to earn significant profit can take a long time. Passive investments, those outside the market that pay you interest, for instance, can take even longer to earn you a decent return. Small cap stocks take much less money to purchase and because of their lower price can double their value with jumps in price that would barely register for a larger company.

Penny stocks require a much smaller capital investment than larger companies, often referred to as mid cap and large cap stocks. The low price of these kinds of investments, allows investors to buy more than one share. Buying more than one stock is a concept that experts encourage so that if a single share loses money, you have other investments that are not losing money, or are perhaps even making you money.

This is the concept of diversification. One of the challenges facing penny stock purchasers is finding advice about day trading such stocks. Typically, stock advisers focus on mid cap or large cap stocks that represent larger companies. The internet offers many days trading stock pick websites but few if any pay attention to the opportunities offered in day trading penny stocks. Many stock experts criticize penny stocks, but some great companies started out as penny stocks.

If you want to learn more, then consult with the experts at Paradigm Capital Management. Paradigm Management is a trusted leader in small cap investing and invests in value stocks of companies across all capitalization

Contact at (518) 431-3500 or visit http://www.paradigmcapital.com/