An interesting question. If you’re reading this blog, chances are you are interested in penny stock investing. Stocks that generally trade below the $2.00 range, but on occasion a bit higher than that. There are however a different breed of stocks. The sub-penny stock. Stocks that trade below $0.05. I’ll be honest here and say that I haven’t participated in trying to game the sub-penny stock game but if you’re able to get in and out with low enough commissions there is money to be made.

Need an example? Try MNL.V

Monarch Energy Limited was up 300% recently in a single day (a price rise of $0.015). Not a bad risk/reward ratio. The tricky part is indeed in the execution. First of all, in a stock trading in a range where half a cent is better than an average market return for a year you can’t be held hostage to market orders or you’ll get slaughtered every time. Limit orders only. Secondly is the actual execution of the trades. Finding buyers or sellers could be difficult if you’re trying to trade the range for profit.

The key once again is due diligence. If you do perform the due diligence and determine that the company is maybe going through some tough times but will recover, then maybe that stock will trade higher toward the 5 to 10 cent range leaving your with an even tidier profit.

There’s a strong emotional factor at play here too. You will need patience and an iron stomach to witness 50% rises and falls in your investment on a daily basis. It’s certainly not for the faint of heart.

If you’ve examined your risk profile and feel that you are comfortable with a small very high-risk investment then perform your due diligence. When it comes time to put real money on the table you will then see if your risk tolerance is as high as you though. A fool and his money are soon parted after all. But we readers here are no fools. We’re out for investing success.

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