Trading in penny stocks requires good networking and picking up the "phone" and doing Due Diligence the right way. . .Most investors are too shy or lazy to speak with the companies that they're invested in. The best thing about Small-cap stocks is the accessibility of the company's management team.
Saw this article today, so took a snippet.... https://stockhead.com.au/experts/trading-with-focus-only-fools-and-horses/ Trading with Focus – Only Fools and Horses .......That low grade unobtanium explorer in Svenborgia It seems pretty easy for a mining ‘entrepreneur’ to get something listed on the ASX. Peg some land, waive some geological mapping around or some rock-chips, get a failing listed company to buy your tenement off you for $500k cash and bucketload of shares and options. There was even a thing once called ‘piggy-back options’, where you get a new option each time you exercise an option, so you exercise some, sell into the market, exercise some more, sell into the market and so forth. A veritable printing press! (Maybe they’re still around, I googled it and saw a reference from 2020…) So our ‘esteemed’ mining ‘entrepreneur’ spent a few bucks pegging a bit of land, takes a boat load of equity, uses the people buying the shares on market like an ATM, and surprise surprise, nothing comes of the drilling. The company buys a few more tenements off a friend and away they go again. Stick around for a few cycles, and you’ll see these ATM’s start off as a tech stock in a tech boom, then when that fails they become a mining explorer looking for whatever is currently ‘hot’, then the next thing and so forth. Well, as much as I’d love to, we aren’t allowed to name and shame those directors or companies that are run with scant concern for your wellbeing, so you’ll need to find them yourselves. Rest assured they have a very solid understanding of the legislation, the ASIC and the ASX and the loopholes they can rort. But they don’t usually change their spots. They just evolve from cycle to cycle. They are also relying on your greed impulses. They pitch the thing to the market as ‘the next big thing’, in a hot sector, pay for some promotion or even issue shares/options to a promoter with the express hurdle of ‘getting the share price up’. Then it starts to move, and you chase it. Is it scam? Hmmm. (my imaginary lawyer just said “shut up now!”)........