Book Review: Invest in Penny Stocks: A Guide to Profitable Trading
Author: Peter Leeds Publisher: Wiley. 198 pages Book Review by Ramu Nakliba On the inside back cover of this book is stated that the online service Peter Leeds Penny Stocks has sold about 35,000 subscriptions, and that it is one of the most popular financial newsletters in the United States. Penny stocks are typically low-priced stocks priced under $5 a share. They are also very volatile. If a $5 stock If goes down just a dollar for example, this would be extremely risky for the penny stock trader – a loss of 20 percent of the investment. A $10,000 investment would lose $2,000 in just one move. Peter explains that when a trader loses 20 percent, he would have to gain 25 percent to come back to its original worth. The more the loss, the greater the percentage of gain needed to recoup the loss. If a penny stock goes down 50 percent or $5,000 in this example, the trader would have to gain 100 percent or $5,000 just to get back his loss. On the other hand, penny stocks are also viewed by some as ‘high-flying’stocks. If a $5 penny stock goes up a dollar, that would be a 20 percent gain, something very difficult to achieve in one trade for a $50 stock for example. The $50 stock would have to go up $10 in a day...
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