Currently, many different kinds of notifications related to the stock market are considered trendy, be it announcements on stock price fluctuations or alerts on penny stocks.
All traders wonder which stocks are best to buy. Though, very often such mailings look like advertisements promising high profits with minimal risks. Various stock alert services report that they can assist traders in making the right choice.
It certainly looks like the perfect trading solution, but is it truly beneficial?
What Are Penny Stock Alerts?
The popularity of penny stocks has increased dramatically over the past ten years. Thousands of traders were able to make substantial profits much faster than it would be possible by trading regular stocks.
The primary feature of penny stocks is low market capitalization, and the Securities and Exchange Commission defines them as stocks with a price below $5 for a single share.
At first glance, low stock prices have made them attractive to traders. It should also be noted that such stocks are characterized by high volatility and reduced liquidity.
Traders can usually buy and sell significant amounts of penny stocks without investing large sums of money. Even with a small investment, a trader can earn good money and also lose everything very quickly as well. Some penny stocks can increase significantly in price and bring fabulous profits to their owners. However, the usual case is that companies issuing those penny stocks are just as unprofitable or may even be bankrupt.
Lengthy preparatory planning is required to successfully enter a transaction with regular stocks. Penny stock alerts are notifications that trading mentors usually send via Twitter, Facebook, Discord or Telegram. They are helpful for novice traders in terms of shortening the time needed for technical analysis and the study of charts of individual tickers. In fact, such offers are very often manipulated.
Penny Stock Alerts Scam
When trading penny stocks, traders can often come up with a variety of tested anti-fraud methods to find fictitious companies. One of the most common trading strategies with penny stocks is called “pump and dump”.
As a result of the popularity of penny stocks, many groups of speculators began to artificially increase the value of these stocks by engaging hundreds of inexperienced traders. A penny stock scam involves mailing and hyping a stock, and many newbies in trading then start to buy said recommended stocks massively.
As soon as the price per stock increases significantly, these unscrupulous entrepreneurs began to sell their own shares at a considerably higher price. After that, the stock price dives, and novice traders, who initially had trusted these promotions, have lost all their investment.
Such an aggressive strategy appeals to the basic needs of beginning traders, who tend to earn as much as possible in a short period of time. This is not a warning about profitable penny stocks, but a way to make money off of other traders.
How to Detect and Avoid Scammy Stock Alerts
How do you determine if a penny alert is real and useful or just a scam? These notifications can be various in type, both free and paid. If you google penny stock alerts, you can find tons of them. These alerts can give you information about penny stocks that analysts believe could increase your investment by exponential amounts. However, the mere fact that this information is free of charge should be sounding the alarm bells.
Most companies that send such alerts indicate that they do not bear any responsibility for the information provided. However, there are alerts with an absolute guarantee of success. You must remember that there is no trading company or mentor in the world that will guarantee you a 100% success. You definitely can learn from them, and sometimes a mentor’s strategies or advice are really helpful, but the only person that you can always rely on is you.
Another feature of such promotions or messages asking you to pay attention to a mentioning of “risk-free” and “safe” trades. However, stock trading always assumes some risks. A trader’s business is to manage risk, but it can never be totally eliminated. Regular stocks are much safer to trade than penny stocks. Promoters of penny stocks usually offer an unrealistic dream because it sounds attractive to be sold.
Lastly, if you accidentally get unexpected advice from an unknown number or user, be it an SMS, email, phone call, or just a notification on your phone, most likely it was sent in the best interest of the sender but not in yours. Pay attention to companies that you give your personal information to.
The Best Free Penny Stock Alerts
It may seem that all penny stock alerts are not worth attention and that this trading area should be avoided. However, this is not entirely true, because not all the services are fraudulent.
For example, Screener.co seems to be a trustworthy fundamental stock screener. Their alerts are free for the first 30 days, and then they cost from $25 per month. Penny Stock Pro Tips gives valuable recommendations. It is useful when notifications are sent if the stock price becomes 10% higher or 5% lower than the initial cost. All subsequent alerts are sent when the market price rises by 5% or falls by 2.5% of the purchase price.
Even if you use information from the best free penny stock alerts for your trades, you need to analyze stocks and gain experience on your own. It will allow you to fully control your trades, rather than relying solely on stock alerts.
It is also to noteworthy that regular stocks are more reliable and predictable than penny stocks. Recommendations from experts about which stocks to pick for a trading day, like Transparent Traders stocks to watch, give you the ability to take your time, analyze the market and make the correct decision, powered by knowledge and experience of a professional trading mentor.