Many stocks are commonly referred to as “meme stocks.” These are typically stocks prone to volatility and large price swings, making them ideal for traders who enjoy taking risks. We’ll look at some of the most popular meme stocks and what makes them so risky. We’ll also provide some trading tips for those considering investing in these volatile securities.
What is a meme stock?
A meme stock is any stock prone to volatile price swings and experiences high levels of trading activity due to online interest. These stocks are often associated with popular culture and social media trends.
What were some of the most popular meme stocks in the past?
GameStop (GME)- GameStop is a video game and entertainment software, retailer. It was one of the most popular meme stocks of 2021, with its stock price increasing by over 1,700% at one point.
AMC Entertainment (AMC)- AMC is a movie theatre chain. It was another popular meme stock in 2021, with its stock price increasing by over 800% at one point.
BlackBerry (BB)- BlackBerry is a Canadian smartphone manufacturer. Its stock price surged in January 2021 after Tesla CEO Elon Musk tweeted that he had bought the company’s shares.
Nokia (NOK)- Nokia is a Finnish telecommunications company. Its stock price surged in December 2020 after announcing that the company would supply 5G network equipment to Verizon.
Koss Corporation (KOSS)- Koss is a headphone manufacturer. The company’s stock price surged in January 2021 after Reddit users began promoting the stock as a way to “stick it to the establishment.”
Here are some tips for trading meme stocks
Don’t invest more than you can afford to lose- Because meme stocks are so volatile, it’s essential only to invest an amount of money you’re comfortable losing.
Do your research- Be sure to research a stock before investing. It includes looking at the company’s financials, news, and other relevant information.
Have a plan- When entering a trade, know your exit strategy. It will help you reduce losses if the stock price starts to drop.
Be prepared for volatility- Accept that meme stocks can be very volatile and be prepared for large price swings.
Use stop losses- A stop loss is an order that automatically sells your shares at a specific price. It can help you control your losses if a stock drops in value.
While meme stocks can be risky, they can also offer the potential for large profits. If you’re considering investing in these securities, approach them cautiously and do your research beforehand.
How can you invest in meme stocks?
You can invest in meme stocks just as you would any regular stock – through purchasing them on the stock exchange on which they are located. This would require a brokerage account with funds deposited in it, as well as access to the specific stock exchange you are looking for.
What are the risks of investing in meme stocks?
Before investing in meme stocks, it’s essential to understand the risks involved:
- Because these stocks are so volatile, there’s a chance you could lose all of your investment.
- Meme stocks are often associated with social media buzz, which can be misleading.
- Professional investors often short these stocks, which can add to the volatility.
Are meme stocks a good investment for long-term growth?
Meme stocks are not typically considered a good investment for long-term growth. It is because they can be very volatile and may only be popular for a short period. However, investing in meme stocks may be a good option if you want to make quick profits. Just be sure to approach these securities cautiously and do your research before entering a trade.
Conclusion
Meme stocks can be risky, but they also offer the opportunity to make quick profits. They are also a good way for stock traders to participate in trends if that is something they are interested in, and experience trading with their peers. It can certainly be a fun experience, as long as you do not trade more than you can afford to lose.
