RE: RNS Monday ?29 Aug 2022 08:20
hi dai, I don't (because I can't) "trade these types of stocks per se.
They are too small, loss making, subject to crucial news being leaked to interested parties, and hinge on an unknown outcome.
On the other hand as a stock/sector they are exciting and have potential to make quick appreciation ( yet 2 more reasons not to trade them.)
If the individual really feels the need then I would have very small amounts of the portfolio invested in them as the risk reward and therefore potential loss are too great.
The worst part is say the individual bets heavily they will come good and they do, then what? hold for more gains or sell? and if you are smart enough to sell, then what find another "hidden gem" only you bet all your innings on it so you can make even more?)
I have dabbled with HE1, and lost more that I made. Was deluded into (thanks to LSE BB's amongst other things) that ADV was a slam dunk, and again lost more than I made due to the inability to trade it after the fall.
I was fortunate to have kept losses well within my personal parameters but I hope all here realise they are gambling in the "worst" sense of the word.
You have no inside knowledge, the BoD are unreliable in their accuracy of info, have no idea of the financial state of the company and have no idea if even a drill will take place.
I have a small position that is fun money to play with and the chart does "work" for these companies, but if news is bad you loose too much without any mechanism available to mitigate catastrophic losses on the original stake.
That is the nature of the sector. I am amazed that so many PI's so readily buy into these high risk minnows, yet at the same time understand completly why they do.
Good luck,