Scam stocks part 2: How you loose money

I'll give you some example, if you have been holding KGRI, the stock price jumped almost 500% in one day from $0.0030 to $0.0150, without any news. Usually such stocks like this open higher in this case it was $0.0090 which means its up by 200% and it keep rallying and all of a sudden it drops. As a long term investor, if you hold this stocks for long run, you may loose all money. So if you invested $ 500 in KGRI at $ 0.0090, you may be holding 55555 stocks. The stock closed at $0.0030 in few days. So the net value of your stock become $ 166. Recently the stock changed the ticker to KGRID, and they did a reverse split, without announcement. The stock opened at $ 1.00  and your number of stock would be reduced to say 50. The bid price was kept at $0.05. So if you decide to sell, 50 stock at $0.05, you will get $ 2.50. Your commission may be more then what you will get. So basically you cant sell such stocks. So from $500 investment, your net value has reduced to $2.50


Conclusion:
1. Never buy stocks which rallies without news.
2. Make sure that the company is active.
3. Don't hold such stocks for long.
4. You may read further tips @ http://www.freefdawatchlist.com/p/tips-to-avoid-scam-stocks.html