The Attraction and Risks of Penny Stock Trading in 2023
Penny stocks represent an exciting but risky path to profits for active investors. These cheap stocks, defined as those priced under $5 per share, offer the potential for astronomical returns on minimal investments. However, penny stocks also come with significant risks, including extreme volatility, lack of financial data, low liquidity and susceptibility to fraud.
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Why Penny Stocks Fascinate Traders
The main appeal of penny stocks is the prospect of significant returns from a modest initial investment. Even fractional price increases can generate outsized percentage returns thanks to the stock’s ultra-low cost per share. The affordability of these stocks also allows traders to acquire substantial amounts of stock without spending substantial capital. This facilitates portfolio diversification into smaller, lesser-known companies in addition to traditional blue chip stocks.
Strategies for Investing in Penny Stocks
The penny stock sphere requires diligent research and wise strategies. Before purchasing penny stocks, educate yourself thoroughly about trading dynamics and regulations. Select a brokerage that specifically facilitates penny stock trades.
– How to Withstand High Volatility with Penny Stocks
Analyze potential stocks in depth and evaluate financials, leadership, operations, products and services. Favor companies with transparency, fundamentals and positive industry prospects. Start positions gradually, as penny stocks tend to be highly volatile. Keep a close eye on invested penny stocks.
Dangers to Watch Out for in Penny Stocks
Despite their profit potential, penny stocks come with increased risks. Prices and valuations tend to fluctuate wildly in response to developments, news and hype. The depth of financial reporting lags behind larger companies, which complicates analysis. Illiquidity can hinder sales as trading volumes evaporate. The penny stock environment is also more susceptible to manipulation and schemes such as pump-and-dump fraud. Be careful and avoid tips or shares that seem excessive.
With sensible strategies, sufficient capital and tolerance for risk, penny stocks offer a path to potential rewards. However, dangers lurk that require research, vigilance and a disciplined approach from penny stock traders.
Headwinds that could drive stock market volatility
Stock market volatility could increase this week. That means the potential to profit from significant swings in stock prices, which penny stocks are already known for. what’s happening in the stock market this week? The September Fed Meeting decision and FOMC rate hike on Wednesday, September 20, 2023, with a press conference starting at 2:30 PM ET.
September FOMC meeting outlook
The Federal Reserve is likely to maintain its short-term interest rate between 5.25% and 5.5% on September 20. While rates are expected to remain stable, the meeting will shed light on possible rate hikes for the remainder of 2023. Despite previous forecasts pointing to a rate hike, recent data and external factors, such as economic disruptions and shifts in the labor market, have added uncertainty taken care of.
Market analysis points to a one-third chance of another rate hike in 2023. Key insights will be drawn from Fed Chairman Jerome Powell’s upcoming statements, while final decisions for 2023 are still in flux.
Penny Stocks to Watch
This brings us to today’s list of penny stocks and putting together a watch list for the week. Despite the uncertainty and the likelihood of a ‘no rate hike’, traders are still speculating about the implications of Fed Chairman Powell’s statements at the Fed press conference.
- fuboTV Inc. (NYSE: FUBO)
- BioLine Rx Ltd. (NASDAQ: BLRX)
- MIRA Pharmaceuticals Inc. (NASDAQ: MIRA)
fuboTV Inc. (FUBO)
Last week we discussed how the top sports seasons will start again. That means entertainment stocks could be a fan favorite. fuboTV is an online pay TV service that offers traditional channels without a cable subscription. The company’s platform also offers a level of interactivity as a sports-first outlet. It gives viewers the opportunity to engage with the content they watch through features like FanView, which displays stats and scores in real time. It also offers the option to stream 4 separate channels simultaneously and in 4K HDR resolution.
While the Disney-ESPN news put a damper on the stock market last week, FUBO stock has continued to recover over the past few sessions. fuboTV recently selected Digital Harmonic’s KeyFrame for advanced video pre-encode filtering. It will enable a further improvement in video quality and a “significant” bitrate reduction.
FUBO stock is also on the penny stocks to watch list of traders looking to short squeeze stocks. According to data from TD Ameritrade, the short interest on FUBO stock is about 17%.
BioLine Rx Ltd. (BLRX)
BioLine Rx shares have been on fire in recent months. The company focuses on oncology, specifically a program supporting therapeutic approaches to oncology and other diseases, motixafortide.
Last quarter, the company announced a publication in Nature Medicine about its GENESIS Phase 3 study. It evaluated motixafortide and G-CSF in stem cell mobilization for multiple myeloma. A new drug application (NDA) for motixafortide is currently under review at the FDA, with a PDUFA date assigned as September 9, 2023.
Fast forward and BioLineRx announced FDA approval of its motixafortide (APHEXDA) in combination with filgrastim. “A greater number of patients with multiple myeloma are eligible for autologous stem cell therapy; however, achieving target collection goals may be difficult in some patients given modern barriers, including treatment of older patients and use of contemporary induction regimens,” said John DiPersio, MD, PhD, principal investigator of the GENESIS study.
This also led to optimism among the analyst community. This month, HC Wainwright increased his target from $19 to $21. The former also maintains a buy rating on the penny stock.
MIRA Pharmaceuticals Inc. (MIRA)
Shares of MIRA stock have moved at the typical pace of newly formed publicly traded companies. Outside of the ARM IPO, most new issuers have faced more downsides from the start, including MIRA Pharmaceuticals. The synthetic THC development company fell from IPO highs of $7.98 in August to recent lows of $3 this month. Even the rally in marijuana stocks didn’t help the penny stock.
This week, however, MIRA has seen a rebirth in bullishness following the latest headlines. The company shared data and research on the development of its MIRA1a as an alternative prescription drug.
“Because marijuana often impairs cognition, it can impair performance at school or work and make it dangerous to drive,” said MIRA’s Chief Scientific Officer, Dr. Kaplin. “Research and studies have also linked heavy marijuana use in children and adolescents to a decline in IQ, and in adults has negative effects on attention, memory and learning. With one molecular change from THC to Mira1a, we now have the opportunity to have a substantial impact on the future of cannabinoids in healthcare and disease.”
With this news, MIRA stock shot from under $4 to a high of over $6.40 on Monday. As of this article, prices are hovering around the high $4 range.
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