We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

How do I Choose the Best High-Risk Stocks?

Jessica Ellis
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Investing in high-risk stocks has the potential to create extraordinary profits. Unfortunately, it has much greater potential to lose money, hence the high degree of risk. Choosing the best high-risk stocks is a little like betting on the long shot in a horse race: it's a good idea to cover the bet with safer plays.

Penny stocks are a popular type of high-risk stock investment because they cost little to buy. Penny stocks are usually available in companies with a low investment grade, new companies, and those that have fallen from prestige. They tend to cost less that $5 US Dollars (USD) per share, which usually means that any loss of value is unlikely to be devastating. Since there is always the outside chance that penny stocks will take off and suddenly inflate in value, these high-risk investments may be a good way to engage in a small amount of high-risk trading.

Shares in a new company are often considered high-risk stocks until the business has developed a history of positive performance. One strategy for high-risk investing involves looking at new companies and trying to determine which are in market segments that are poised to take off in the new future. Companies that offer products and services that are innovative or in an under-saturated market may be good high-risk investments. Since many public companies exist privately for a while before issuing stock, it can also help to look at the performance record of the business before it went public.

Some of the research needed to choose the best high-risk stocks involves eliminating bad risks. Buying high-risk shares from companies that have a recent history of decline, are in an eroding segment of the market, or have their value inflated by a bubble can be a dangerous investment. While all high-risk stocks naturally have a greater chance of losing value than gaining it, researching the industry, market and recent history of each company can help eliminate companies with a much higher probability of losing value.

In some cases, a high-risk investment may be categorized as such because of the volatility of its market. While these can be poor long-term investments, if a company shows a pattern of gaining and losing value repeatedly over a few days or hours, it may present a good opportunity to make a profit in a short time. Timing is key to this type of investment; an investor must be able to measure the adrenaline of the market to know when to buy and when to sell. Short-term high-risk stocks are not for the faint of heart or the extremely busy; an investor may have to literally sit at his or her computer monitoring the moment to moment shifts in order to make the best trade.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jessica Ellis
By Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for SmartCapitalMind. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.
Discussion Comments
Jessica Ellis
Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.