Risks of Buying Pre IPO-Shares

1. Risks of Buying Pre IPO-Shares Investing in the upcoming IPO is believed to be a great investment. If you want to invest in this market, make sure whether it is good to buy the IPO stock now. According to the experts, investing in pre IPO shares can bring massive profit in double or triple at price within a short period of time. But it is too risky also because not all IPO shares can give you that much profit. IPO does not have trading history like other stocks of the market. Therefore there is no other way to evaluate how market is going to judge stocks until they get listed. When you buy stock at IPO price is not that you are buying it at lowest. Actually it is priced in accordance with how much market will pay based on surveys made by the underwriter among investors. Here are the risks involved in buying IPO shares: 1. Have profit at the right time In the starting days of trading, IPO will be unpredictable. So plan a strategy to sell it. You can lock your profit once you achieve the return you were expecting right after the listing day. If you believe in long-term investment then only take the chance of cashing out the gains when the opportunity is present itself. Even buying it later also possible if you feel comfortable with the stock trend. 2. Chase it on the first day If you really believe in the probability of IPO and want to invest in more shares, you must wait for some more days so that stock get settled down and begin to accumulate. History shows that IPO gets traded at a higher price than offer price on the listing. But they all give way to profit taking within few days. Most of the IPO recovers after correcting that gives you the chance to make a profit on the stock rally. 3. Follow Hypes and publicity When a company gets publicity then underwrites will make sure the IPO to be successful no matter it is attractive or not do investment. IPOs are promoted heavily by underwrites because they have to sell them so that public make the investment in it. So avoid buying if your broker is putting pressure on you or your friend has said that it is oversubscribed. 4. Invest in the branded recall It is not that IPO from familiar brands is going to be good investment always. Even though strong brand recalls help to promote IPO but there is not any guarantee this time it will do well

2. again after listing. Each IPOs have different stores some with good names but there will not be solid financial to show on. 5. Invest in no stop-loss plans There is always a chance to buy pre-IPO shares wrongly. When it happens you should be prepared for cutting the losses any. Never get emotional with investing in IPO and you forget how much risks are involved in it. Manage your risk before you invest in right IPO share. Some IPOs are perceived to be cheaper on the basis of growth while other more expensive. Buy pre IPO shares at Finstream Consultancy LLP when it gets traded in the stock exchanges and until you do not know where it is going. Manage your risk yourself and control the loss.