The limit on the closing price of $5 is a specific criterion used to focus on penny stocks that are trading at a price level where they are still considered "penny stocks" but are approaching a higher price point. This criterion helps to identify stocks that are potentially gaining momentum and could be on the verge of breaking out of the penny stock range.
Having a closing price limit of $5 ensures that the stocks being considered are indeed penny stocks, which are known for their high volatility and speculative nature. This limit helps to filter out stocks that have already significantly increased in price and may no longer be suitable for investors who are specifically looking for penny stock opportunities.
On the other hand, removing the limit on the closing price would broaden the criteria to include stocks that could be considered "micro-cap" or even small-cap stocks, depending on their market capitalization. This would result in a more diverse range of stocks being considered, including those that are not necessarily penny stocks anymore.
Whether it is better to have no limit on closing price or to maintain the $5 limit depends on the investor's strategy and risk tolerance. A limit of $5 might be more suitable for those who are strictly looking for penny stock opportunities, while removing the limit could appeal to investors who are interested in a broader range of lower-priced stocks.
In the context of the aggressive approach aimed at capturing stocks with strong momentum for potential rapid gains, the $5 closing price limit helps to maintain the focus on high-risk, high-reward opportunities that are characteristic of penny stocks.
10/24/2024 03:42pm
