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Most penny stocks are quite volatile so if you pick the right stock at the right time, you could make a lot of money. However getting either wrong and you could lose a lot of money. Also penny stocks are more likely than stocks in the s&p500 to go bankrupt. In that case you would lose your entire investment.

The only realistic way to trade penny stocks is short term. And statistically short term trading is more risky than long term buy and hold strategies.

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