Figuring out when to buy and sell stocks can be a minefield. It’s difficult enough trying to work out the profit and loss from a particular trade but, in truth, it shouldn’t be.
By using a penny stock calculator, you can simply enter the number of shares, the price of your purchase, the final selling price, and any commission fees for the trade.
In no time at all, a penny stock calculator can show you the figures of any profits or losses after commission fees.
Before you use a penny stocks calculator, you may be wondering what ‘penny stocks’ actually are.
Read on as we discuss penny stocks, what they are and how to calculate them easily for future investments.
Penny Stocks – What Are They?
A penny stock generally refers to the stock of a company, typically, a small company, that trades for lower than $5 a share.
A few penny stocks use the largest exchanges in the world to trade on. One example is the NYSE (New York Stock Exchange).
However, the majority of penny stocks use Over-The-Counter (OTC) transactions to trade. This is done via the electronic OTC Bulletin Board.
Penny stocks are often referred to as ‘small cap stocks.’ They tend to carry higher risks than traditional, regular stocks, but one advantage of them is that they can potentially yield a higher profit in the long run.
What Is A Penny Stocks Calculator?
A penny stocks calculator is exactly what it sounds like. It is a simple calculator that helps you figure out the profit or loss incurred on particular penny stock trades.
It is a simple tool for you to take advantage of. You can easily calculate shares that you have bought and, therefore, work out how much money you will require.
How To Use A Penny Stocks Calculator?
Using a penny stock calculator couldn’t be easier.
Here’s an example of how to use one:
- Enter the amount you have to invest. The penny stock calculator will inform you of how many shares you can afford to buy.
- Enter the number of shares you wish to purchase. The penny stock calculator will inform you of how much money you will require.
- Enter the buy price and hypothetical sell price. The penny stock calculator will inform you on how much profit you have generated or how much you have lost.
It’s as simple as that. Just a few steps and you can figure out your profit or losses from certain trades with ease.
How A Penny Stock Calculator Works
Penny stock calculators are not just easy to use, but the formula behind how they work is also straightforward.
Here’s how they work:
Profit/loss = (The Sell Price x Number of Shares Purchased) – (The Number of Shares Purchased x The Buy Price)
Using this formula can help investors get a clearer picture of how their stocks are doing and whether they can expect any profit or loss going forward.
Are Penny Stocks Risky?
Penny stocks can help small businesses get access to money from the wider population. Such companies often use penny stocks as catalysts to transition into a greater, more lucrative marketplace.
Because these small companies sell at very small prices, there is space for a large upside. On the other hand, there are various factors that can heighten the risk posed with trading or investing penny stocks.
For a starter, securities tend to be riskier than larger, more established companies. These are known as ‘blue-chip’ stocks.
Blue-chip essentially refers to a well-established, nationally recognized company that is deemed to be financially safe.
These companies typically sell top-quality services and products that are accepted by most exchanges.
They also tend to have a track record of dealing well with downturns in the financial marketplace and are often profitable, even when faced with unwelcome economic conditions.
All of this combined helps these companies enjoy a prolonged record of secure, reliable growth.
Pros And Cons Of Penny Stocks
Let’s explore some pros and cons associated with penny stocks.
- Provide small companies a place to access public funding.
- With lower prices, penny stocks can result in a significant advantage in share appreciation.
- In some circumstances, penny stocks can offer a particular way to achieve access to larger, more powerful marketplace listings.
- There is only limited information on a company’s financial record because it is relatively new.
- Penny stocks tend to lack a liquid market with some buyers. This can happen even after prices have increased.
- There is a higher risk of underlying companies filing for bankruptcy and committing fraud with penny stocks.
Using a penny stock calculator is the easiest and, arguably, the best way to find out any profits or losses made on particular penny stock trades.
Use our penny stock calculator to calculate your potential profits today.
If you enjoyed this article, you might enjoy our post on ‘What Are The Best Stocks Under $1?‘.
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