Risk Factors of Investing in Penny Stocks under Rs. 30

Investing in penny stocks can be risky due to the non-stability in the price, but it is essential to understand the risks involved in the penny stocks:

The following are the major risk factors involved in penny stocks.

High Volatility:

Penny stocks witnesses extreme price fluctuations. Their prices can swing drastically within a short period, your investment can increase or decrease rapidly with in no time.

Liquidity:

Penny stocks often have low trading volumes, it is challenging to buy or sell shares at the desired price. You might end up with a price you can’t exit.

Lack of Information and Transparency:

Many penny stock companies are small and not well-known. They may not provide sufficient financial data or company information, it is challenging to assess their true value and potential risks. Even the media focuses less on these kind of stocks.

Market Manipulation & Speculation:

The penny stock market can be easily manipulated in terms of price and volume. Big traders & groups may spread false information in to the market to get benefited out of this, it will incur huge losses to novice traders.