Investing in small-cap stocks can be lucrative, but it's important to understand the risks involved. One of the biggest risks is liquidity. Small-cap stocks often have low trading volume, which can make it difficult to buy or sell shares at a fair price. Volatility is another risk. Small-cap stocks can experience significant price changes quickly because they're typically more volatile than large-cap stocks. Small-cap companies may also be resource-constrained and frequently more vulnerable to economic downturns. When buying small-cap stocks, you must do extensive research and diversify your investments. While there is a chance for substantial gains, before making any investment decisions, the risks must be thoroughly considered.
The risks of investing in small-cap stocks
- Thread starter Johnson2468
- Start date
Penny stock is a good example of small cap stock. Small cap stock can be easily manipulated . Pump and dump happens only in small cap stocks because the trading volume is small.
