Small Cap Stocks

Small cap stocks are simply smaller companies, depending on who you talk to they can be stocks with a market capitalization of $1 billion and lower or they can be stocks with a market capitalization of $2 billion and lower.

So why does it matter for traders and investors? Well for one thing smaller companies are considered riskier. Because they are smaller companies they can be.

1. Easily Destroyed By their competition

2. Harder for them to Last through tough times

3. Hard to find financial data on.

The nice thing about small caps, however, is that they can grow at a much faster rate than other stocks. If you are a big company like McDonalds there isn’t much room for you to grow. But if you are just starting out with only a few restaurants open you still have plenty of room to expand.

They can be quite profitable just as long as you keep your risk small and have a plan for buying them.