+1 on the risk issue. If you don't do your own research, you're gonna lose out your arse!
Pinksheets & Penny Stocks & OTC Securities are all slightly different little monsters with high volumes!
Personally, I'll try to avoid playing many Pennys & Pinks because of their unreliability, extreme risk, and volatility. SOME of them hold some SERIOUS potential for profits though!
I once pulled ~725% profit off one, and another I'm watching VEEEEERY closely is possibly going to get 427% or so in the not-too-distant future (if all goes well).
Sometimes people hit the lotto, and sometimes they lose 45% of their investment (or more). If you're gonna pay the pennies you've got to watch your $$ every minute of the day or you're gonna possibly lose out out your arse!
High volume, low-cost shares are a great QUICK money-maker!
But it's like Blackjack at a Casino to some people!
It can get addictive quickly, and it can also be a great QUICK money-loser!
On some stocks I've lost +45% of my $$ in a day, and on others I've gained +110% in a day! The trick is to watch it daily, and learn how to NOT WORRY about it so much! If you check your Level-2 real-time streaming market data you'll see that there are higher-powers at play with many of the penny stocks!
Watching MM's like NITE (who's MORE than happy to take your money from you!) swoop down on a penny stock with an increasing activity volume, you can sometimes watch MMs nearly stop a share price dead in the water, drive the price up or down, and really wreak havoc on some penny stocks!
INUHBAD'S CARDINAL RULES OF TRADING PENNY STOCKS:
1.) ONLY TRADE ON A CASH ACCOUNT - YOU'D BE A FOOL TO GO ON MARGIN!
2.) ONLY INVEST WHAT MONEY YOU CAN AFFORD TO LOSE (Some people are lucky to break even)
3.) SET BUY/SELL STOP LIMIT (or Trailing Stop Limits if you can) Amounts ON YOUR ACCOUNT. This way you tell the computer to automatically SELL OUT your shares if it reaches a certain price (high to make profit , and a low limit (just incase -- A trailing stop limit sell order if you can) to cut your losses before it hits you worse).
4.) WATCH YOUR MONEY LIKE A HAWK THE WHOLE TIME (that's the WORK part).Sometimes you can make a quick $500+, sometimes you can make a quick $10,000+
, and sometimes you can make a quick -$6000-
, or a -$350-
... It's all about RESEARCH, ANALYSIS, AND TIMING!