What are the Common Risks and Scams of Investing in Penny Stocks

Penny stocks seem like a great opportunity to make money. They are inexpensive, and you can buy them with just a few dollars of your hard-earned cash. However, penny stock trading poses risks that many people don’t even know about!

If you’re reading this, it’s likely that penny stocks are something you’ve considered investing in. You might have seen a few posts on your Facebook wall from people who say they turned money into more money and made thousands overnight – but the risks are there!

Risks of Investing in Penny Stocks

Penny stocks come with high risks though with the potential for above-average returns. As a result, investors should be mindful of how they invest in penny stocks because they can lead to financial ruin quickly.

Penny Stock Scams

These pumpers often use email or online posts to tout how much money people can make with certain penny stocks so as to encourage more buying.

1. Pump and Dump

Short and distort is the mirror image of pump and dump. It works by shorting the stock on Robinhood or a Robinhood alternative (usually in a bull market) and then releasing false information to send the price plummeting.

2. Short and Distort

This scam will involve a company that is almost bankrupt and has very little earning potential. Certainly not one of the appreciating assets worth investing in.

3. Reverse Merger Deceptions

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