To learn to trade penny stocks successfully is out of reach of most people. This doesn't have to be the case but unfortunately most people don't arm themselves with the knowledge to profit in this market. Most people are lazy and don't put in the required effort to be successful. It is difficult for most people to comprehend, however 99% of the traders that get involved in learning to trade penny stocks lose everything. The biggest reason that this occurs is mainly due to the fact that most people are unaware of what this market really is. They think that trading is as simple as buying a company that seems to be "going places," when this is extremely far from the truth. The real reason for the capital markets is to raise capital. In this light, a market such as the OTCBB market, is very similar to all other. The true disparity between this market and the big board stock market (NYSE and NASDAQ), is the fact these penny stock companies are not attempting to increase their capital through secondary offerings in order to cultivate their business and improve shareholder wealth.

As a substitute, they are simply offering worthless shares of their companies stock so that they will have enough capital to stay in business and pay their CEO's absurd salaries. Why should a CEO of one of these low priced companies be paid $700,000 per year when the company never earns a profit? It is fine for exploratory companies to lose money as long as they have the prospect of eventually earning a profit but unfortunately these companies stay in an exploratory state forever! The biggest dilemma is that a large amount of these penny stocks have been around for a decade or more and have never even come close to earning anything. What this basically is saying is that everything they have done is a complete waste in terms of increasing shareholder value. 99% of these firms have next to no chance of making money because they are simply down-right frauds. Their only reason to exist is to have a means of taking all of their shareholders money through pump and dumps. On this basis, if you get in involved in trading the stocks, there is almost no chance that the average uninformed person will ever make money in the market however certain traders can make a killing by taking advantage of these uninformed individuals.

While a handful of people make money due to luck, almost everyone else that gets engaged in buying these type of stocks loses money. There are also a small group of traders that have learned to trade penny stocks successfully and these people also make money. Uninformed individuals that believe penny stocks are good investments, almost always lose all of their money. In the world of finance it is common sense that you should never invest in company which consistently loses money, but unfortunately it happens every day. Investing in the penny stock market is not smart and it's better to hold on to your money than to throw it away. That's what you are doing if you buy and hold one of these low quality companies for more then a couple days. The general public believes that investing in low priced OTC stocks will make them rich but they are way off base! If you want to earn thousands of dollars than you need an advanced trading system to time your entries and exits. Trading in and out of penny stocks in hours or days is the only way. There is no other way to make consistent profits without doing this. Maybe you will make money here and there trying to follow of peoples trade alerts or free stock picks but learning to trade penny stocks on your own is the only way to become consistent. Don't go at it alone.