I could only do this series of posts on a weekend. I could have posted the definition of a penny stock at any given time, but the advantages are something that need to be followed by the disadvantages immediately after. The reason for this is that if a person is only shown the good side and not the whole picture they may do something irrational.

There are several reasons why a person might be interested in purchasing shares of a penny stock. Many new investors are lured to the appeal of penny stocks due to the low price which means they can purchase more shares and/or shares of more than one company.

People also get excited about the potential for rapid growth. If you purchase 1,000 shares of a company at $4.25 per share and the stock rises to $4.75 per share you just made $500 and many companies can easily move 50 cents or more per day.

Another reason that people may become interested in purchasing one of these penny stocks is because they think that they have found a company that has a great product and good business practices. If they are right, the price of the stock could over time go up as much as 1,000 percent or more.

These are just a few of the reasons that a person may become interested in and want to purchase positions in some penny stocks. Luckily, I’m doing this series on a weekend so I will be able to show some of the negative aspects about them before anyone sees just the positives and rushes to purchase penny stocks.