The low liquidity of these securities, also known as chicharros, is a factor that prevents investors from being able to enter or exit their positions with some ease. Where their high volatility makes them very dangerous values for investment, since it can earn a lot of money, but also lose it very quickly. They are the goal of many of the most speculative small and medium investors who want to earn a lot of money in a short space of time over other technical considerations.
Under this designation as curious as they are peas, as at the same time so little technical, they include a series of very characteristic values of Spanish equities. They are distinguished because they are small capitalization and have a volume of contracts that barely becomes representative of the sale and purchase operations on the stock market. But if there is one thing they are very popular with investors, it is because of the strong fluctuations that the price of their shares show.
Both in what refers to the increases or decreases in its daily price, as well as the differences between its maximum and minimum prices that can perfectly reach the 10% in a single trading session. To the point of becoming one of the financial assets most likely to enhance the speculative nature of equity transactions. Well, in equities there are many securities of these special characteristics and that will delight users prone to this kind of operations, which on the other hand carry a great risk in movements in the equity markets.
Speculative securities: what are they?
With this background, the Spanish stock market has always been characterized by presenting a series of values that keep these constant and that can make investors a lot of money. Although due to their special peculiarities they are also very sensitive to generate significant depreciation in their value. Without being part of any selective index, they are represented both in the Continuous Market and in the Alternative Stock Market (MAB). Through well-known listed companies such as Sniace, Deoleo, Eurona or Codere, among a long list of investment proposals.
In all cases, these are very dangerous values due to the high speculation that their operations represent. They are especially suitable for operations intraday or carried out in the same trading session. Precisely because they allow the divergence between the entry and exit price to be wider than usual. But with the undeniable risk of getting hooked on their positions. That is, with a quoted price far removed from the purchase due to its enormous volatility.
How to operate with these values?
For this precise reason, it is necessary to be very prudent to operate with these securities since they are only profitable if the stock market bet materializes at the right time. Something that investors with less learning do not always develop correctly with this class of values. Not in vain, the prudence should be the common denominator in all actions by medium and small investors. Where not all the available capital is invested, if not on the contrary a minimum part of these economic contributions to put it at risk in an unnecessary and risky way.
These are very characteristic titles that are very prone to developing strong gains that accumulate since the beginning of the bullish movements. Although for the same reasons, they tend to run inverse trajectories. One of the clearest examples is represented by Hard Felguera and that highlights the complexity of these values. It shows a revaluation of around 10% during 2018, above the levels shown by the Ibex 35, which is leaving 5%. It cannot be forgotten that the differences between their maximum and minimum prices in all trading sessions are very high and above the rest of the values that make up Spanish equities.
Characterized by high volatility
On the contrary, and showing the great oscillation in the conformation of their prices, it has depreciated 68% for the past two years. Noting the difficulty to operate in the medium and long term. Not surprisingly, it is one of the common denominators that the peas have: they are used for specific operations and limited in terms of permanence. They should not be used at any time, far from it. If not, on the contrary, for very special moments where it is really worth opting for this kind of investment so special and different from the rest of the national stock market.
As a consequence of these hallmarks, there is a lot of money that can be earned by opening positions, but also a lot of euros lost along the way. With variations in a single trading session of up to 25%, in one sense or another, as a consequence of any rumor or corporate event linked to its financing or the interest of other listed companies. With very few stocks being traded, trends tend to be very violent. With a Change of trend which is another of its most relevant common denominators of these speculative values or called as chicharros.
Detect these values correctly
In any case, to detect the peas in the stock market, nothing better than to go to their contracting volume and decipher who are their representatives. They are characterized because the change of titles in the market barely reaches a few thousand euros. In contrast to blue chip of national equities that trade large amounts of money in a trading session, in around 10 or 20 million euros. Although in the most active periods of their quotation, the peas double their hiring. This is a small signal to detect these very special values of the national equities.
Another aspect that defines these companies is that in no case do they distribute dividends among their shareholders. Because their lines of business do not bring benefits to business accounts. So more than a reality in their business, they are based on expectations and for this reason they are more vulnerable to moving in fluctuation margins very high in their prices. Not surprisingly, this class of stock values are unmistakable and are on the lips of a large part of investors who are given to this class of operations so atypical and at the same time with so much risk in the movements taken.
Contributions of these values
It is true that the values known as chicharros can also generate the odd benefit at certain times of the investment. Do you know which are some of the most relevant? Well, so that you can operate successfully in this investment group, you will have no choice but to know what are some of the most positive contributions that they can provide you and that of course they have them, although many of the small and medium investors are unaware in these moments. As for example, the ones that we are going to show you below:
- Su upside potential it is huge and in some cases it does not even have limits. Some of it is lacking in the more conventional values of national equities. You just have to live with a higher risk that you should assess whether or not it suits your profile as an investor.
- You have one wide range of values with these very particular characteristics. Of course, more than what you imagine from the beginning and in this way you have many options to choose from and being present in a large part of the stock market sectors. In any case, you will not miss proposals if you want to satisfy this demand on the Spanish stock market.
- Another of its most important advantages is that one of these values they are very liquid contrary to general belief. Where you will have no problem to enter and exit their positions at any time and situation. Although very careful with it, because it does not affect all speculative values, but only a select few.
- If what you want are strong emotions of course you are facing the best of investments. For this reason, only those who want to live with this feeling should operate with this class of values so special for all investors. Not surprisingly, the main incentive for some of them is precisely the risk. It is a very well defined profile for a somewhat particular class that some small and medium investors present.
The risk of these operations
- On the other hand, you should also consider and analyze the risk involved in these kinds of operations on the stock market. They are more than you can imagine, but we are just going to point out some drawbacks of these operations.
- You can lose a good part of your capital available in a short space of time.
- You must know how to operate with these values, otherwise the risks will increase significantly.
- They are not sensitive for you to make large monetary contributions to operations, but under movements of small amount monetary.
- And finally, that almost always they are governed by their own rules and they do not follow the trend of the markets.