If you’d like to get started in the stock market, many brokers may suggest you start with penny stocks. For several reasons, penny stocks are considered “easier” to buy than many other types of stock. But in order to buy penny stocks, you need to know what they are.
So, what are they? Very simply, penny stocks are low-priced shares of companies. These stocks trade very infrequently, which is why they’re considered good for beginners, but this makes it very hard to ever sell your penny stocks. In some cases, you may end up just getting “stuck” with the penny stock you buy because it proves impossible to trade. This is why some people say buying penny stocks are a risk.
They are a rather controversial type of stock, but on a small enough scale that controversy is rarely heated. When you invest in penny stocks, it’s important to prepare yourself for the fact that you may lose your total investment because you never get the opportunity to trade away your penny stocks. Maybe penny stocks trade over-the-counter, when they do trade at all.
Another thing that sets penny stocks apart is that they don’t trade in the mainstream stock markets (NYSE, NASDAQ, or AMEX). They also usually have market caps at $500 million. But when things go well with penny stocks, investors can buy them cheaply and profit from them quickly. The trick to doing this is in knowing a lot about penny stocks, and knowing how to work with them. This may be a trait that comes from trading experience.
Before you decide to put your money into penny stocks, know that they are considered to be “high-risk investments.” This means there is a lot of potential to lose your money with penny stocks, too. If you’re a bit of a gambler at heart, you may enjoy working with penny stocks. This is one reason why some are drawn to penny stocks – the excitement of it and the potential risk. There is a chance to make a huge profit, as well, so many are willing to take the chance on penny stocks in hopes of a large return.
Once you know what they are, you can look into learning more about specific penny stocks that are available for purchase. It’s a good idea to do research on any stock, and on any kind of stock, before investing your money. After all, the stock market can be very risky and you have the potential of losing. Make sure you don’t lose something that you can’t stand to live without. This way, you’ll be sure not to regret your investment. Whether putting your money into penny stocks or some other type of stock, take the time to do your research first. This will help you make an informed, educated decision. This is the best way to invest your money – by thinking and planning ahead, so you know that you’re going to do something that you’re pleased with.
Penny Stocks Risks
The first point to remember is that large market cap stocks are likely to be registered on a national stock exchange such as NASDAQ. The reason for this is that when large volumes and amount are involved, which by definition is true for a large market cap stock, it is extremely difficult to get all that trade done outside a stock exchange. Although it is theoretically possible for a large stock to be traded on Pink Sheets and OTCBB, it will be difficult to sustain high volumes on these, because many people, who trade on recognized stock exchanges, may not trade in these stocks, particularly in large volumes.
Registration with a stock exchange involves a number of formalities that have to be complied with. These formalities are aimed at making the whole process more transparent so that the investor has access to relevant information. The availability of information helps you to verify the facts and also to check out on the soundness of the company more thoroughly. When these are missing you are operating under insufficient information and therefore are exposed to higher risk. Thus stock exchange registration by itself reduces the risk involved in investment.
Apart from this, there are other reasons why a penny stock is more risky than large market cap stocks.
Stocks registered with a recognized stock exchange are required to maintain minimum standards. These include requirements such as
Minimum number of publicly traded shares – this should be 1.1 million shares in the case of NASDAQ. The publicly held shares should also be a minimum of 10% of the total shares of the company.
Minimum Shareholder Equity
Minimum Operating income
Availability of market makers
The specified minimum amount should be available in assets, total revenue and listed securities.
There are many such requirements that a company has to meet in order to stay registered with the stock exchange. Basically, these requirements ensure that the stocks are widely held, and the company is running properly. These safeguards make the listed stocks less risky than unlisted ones, which do not have to follow any such requirements.
Penny stocks also generally do not have a history behind them, and suffer from low liquidity position. They have less room to maneuver. Because they are more risky and less preferred they will also have difficulty in raising money for new ventures or expansion. In some cases they may have difficulty in raising money even for operations. Companies generally raise money by borrowing or raising new capital. The amount that can be borrowed is limited for a given equity base. Suppose the company has $100,000 in capital, lenders may be willing to lend $200,000 or some such amount. If the company wants to borrow more money, it will have to first increase its capital base. This is more difficult in the case of penny stocks.
Finally, it might not be equally easy to find buyers in the case of penny stocks particularly if you have a large number of them. This will affect your own liquidity in the short term and also make it difficult to offload these stocks if the going is not too good.
These are some of the reasons why a penny stock is considered more risky. However, penny stocks have their brighter side too. They can give you much higher returns. We’ll see how this is possible in the next article.
Registration with a stock exchange involves a number of formalities that have to be complied with. These formalities are aimed at making the whole process more transparent so that the investor has access to relevant information. The availability of information helps you to verify the facts and also to check out on the soundness of the company more thoroughly. When these are missing you are operating under insufficient information and therefore are exposed to higher risk. Thus stock exchange registration by itself reduces the risk involved in investment.
Apart from this, there are other reasons why a penny stock is more risky than large market cap stocks.
Stocks registered with a recognized stock exchange are required to maintain minimum standards. These include requirements such as
Minimum number of publicly traded shares – this should be 1.1 million shares in the case of NASDAQ. The publicly held shares should also be a minimum of 10% of the total shares of the company.
Minimum Shareholder Equity
Minimum Operating income
Availability of market makers
The specified minimum amount should be available in assets, total revenue and listed securities.
There are many such requirements that a company has to meet in order to stay registered with the stock exchange. Basically, these requirements ensure that the stocks are widely held, and the company is running properly. These safeguards make the listed stocks less risky than unlisted ones, which do not have to follow any such requirements.
Penny stocks also generally do not have a history behind them, and suffer from low liquidity position. They have less room to maneuver. Because they are more risky and less preferred they will also have difficulty in raising money for new ventures or expansion. In some cases they may have difficulty in raising money even for operations. Companies generally raise money by borrowing or raising new capital. The amount that can be borrowed is limited for a given equity base. Suppose the company has $100,000 in capital, lenders may be willing to lend $200,000 or some such amount. If the company wants to borrow more money, it will have to first increase its capital base. This is more difficult in the case of penny stocks.
Finally, it might not be equally easy to find buyers in the case of penny stocks particularly if you have a large number of them. This will affect your own liquidity in the short term and also make it difficult to offload these stocks if the going is not too good.
These are some of the reasons why a penny stock is considered more risky. However, penny stocks have their brighter side too. They can give you much higher returns. We’ll see how this is possible in the next article.
Penny stocks market
Penny Stocks: There is full-fledged market for the penny stocks, however these stocks have very limited liquidity. One of the reasons for the penny stock market’s volatility is its limited liquidity, however the penny stock markets are very popular.
Penny stocks, sometimes also termed as micro cap are low priced stocks generally traded in over the counter market. Most of the stocks are available in a penny that’s why these are known as penny stocks.
The penny stocks are generally offered by a company having less than 3 years in business and have less than $5 million net tangible assets or a company has at least 3 years in business and has under $2 million net tangible assts or a company has $6 million revenue for 3 years.
Over The Counter Bulletin Board: OTCBB (Over the counter bulletin board) provides complete information for more than 3000 stocks including real time quotes display, last sale price and volumes. These equities are generally not traded in any national stock exchanges. The OTCBB electronically provide real time quote for domestic as well as foreign stocks and ADRs and also displays previous days trading activity in DPPs. More than 200 market makers are registered at the OTCBB. Over the counter bulletin boards are preferred over pink sheets.
Pink Sheets: Pink sheets is published and maintained by Pink Sheets LLC and it displays bid and asked quotation prices of different penny stocks. Companies listed in pink sheets are most risky as most of the companies easily meet the minimum requirement for listing.
Penny stocks at pink sheets are thinly traded. Many companies pay traders for selling these penny stocks and thus brokers uses all fraudulent activities to sell the shares and evade money from people.
Market Makers: In some of the cases, only a few market makers are actively involved in a specific penny stocks and buy and sell these specific securities only. Dealing with a market maker is preferable, as the market maker not only sells the specific stocks but it also buys the stocks. Around 230 market makers are approved by the OTCBB and these market makers buy and sell stocks on regular basis. It is also preferable to see that more number of market makers is available for specific stocks. Lower number of market makers can influence or manipulate the specific stocks. In such a case the investment in the specific penny stock is risky as these few market makers can control the prices of the stocks and thus can keep a wide gap between the sale and buying prices of the stock. In recent past some of the market makers were found to involve in the fraudulent activities.
Summary: There is a full-fledged market of penny stocks and penny stocks are traded at over the counter bulletin boards (OTCBB) and pink sheets. OTCBB is governed by the rules and regulations of the Securities and Exchange Commission of United States.
Penny stocks, sometimes also termed as micro cap are low priced stocks generally traded in over the counter market. Most of the stocks are available in a penny that’s why these are known as penny stocks.
The penny stocks are generally offered by a company having less than 3 years in business and have less than $5 million net tangible assets or a company has at least 3 years in business and has under $2 million net tangible assts or a company has $6 million revenue for 3 years.
Over The Counter Bulletin Board: OTCBB (Over the counter bulletin board) provides complete information for more than 3000 stocks including real time quotes display, last sale price and volumes. These equities are generally not traded in any national stock exchanges. The OTCBB electronically provide real time quote for domestic as well as foreign stocks and ADRs and also displays previous days trading activity in DPPs. More than 200 market makers are registered at the OTCBB. Over the counter bulletin boards are preferred over pink sheets.
Pink Sheets: Pink sheets is published and maintained by Pink Sheets LLC and it displays bid and asked quotation prices of different penny stocks. Companies listed in pink sheets are most risky as most of the companies easily meet the minimum requirement for listing.
Penny stocks at pink sheets are thinly traded. Many companies pay traders for selling these penny stocks and thus brokers uses all fraudulent activities to sell the shares and evade money from people.
Market Makers: In some of the cases, only a few market makers are actively involved in a specific penny stocks and buy and sell these specific securities only. Dealing with a market maker is preferable, as the market maker not only sells the specific stocks but it also buys the stocks. Around 230 market makers are approved by the OTCBB and these market makers buy and sell stocks on regular basis. It is also preferable to see that more number of market makers is available for specific stocks. Lower number of market makers can influence or manipulate the specific stocks. In such a case the investment in the specific penny stock is risky as these few market makers can control the prices of the stocks and thus can keep a wide gap between the sale and buying prices of the stock. In recent past some of the market makers were found to involve in the fraudulent activities.
Summary: There is a full-fledged market of penny stocks and penny stocks are traded at over the counter bulletin boards (OTCBB) and pink sheets. OTCBB is governed by the rules and regulations of the Securities and Exchange Commission of United States.
Penny Stocks: From Little Pennies to Big Dollars?
There’s a lot of hype out there about penny stocks. Internet spam and flashy web sites claim that penny stocks turn your tiny investment into a big, big return. But are penny stocks all that they’re cracked up to be?
Many investors and brokers may claim that investing in penny stocks is a good way to start small and end big. Buying penny stocks means buying low-priced shares of small businesses and companies. Penny stocks are much less “liquid” than other types of stocks, as penny stocks have few shareholders. For some investors, an initial small investment in penny stocks can mean big returns later on.
But penny stocks are considered a high-risk investment. They trade infrequently, meaning that it may be difficult to sell penny stock when desired. There is a chance that, when investing in penny stocks, you will lose your entire investment. For some traders, this type of excitement and risk is simply the name of the game. Others prefer “safer” investments. But the final choice is yours. With penny stocks, can you turn little pennies into big dollars?
Of course it’s possible. With the stock market, anything is possible. Penny stocks are unique in that they are not traded on the big exchanges, rather over-the-counter. Investors who are interested in penny stocks can look for potential investments on Pink Sheets and like documents. Penny stocks are neither approved, nor disapproved, by the SEC. They are legal, but they are risky. They are small investments, for investors who want to make smaller, but potentially more dangerous, investments.
However, some of the claims about penny stocks are true. Shares in penny stocks are very affordably priced, and there is always the hope that this investment will in fact bring in big results. For those who want to get a taste of the stock market, penny stocks may be a good way to start. Learn more about penny stocks, and follow the progress of some penny stocks, to see if this is something you think you’d like to pursue. Don’t take someone else’s word for it, but track the progress of penny stocks for yourself. This is a great way to learn more about not just penny stocks, but the stock market in general. By learning all you can about penny stocks, you set yourself up for future success. The more you know about trading, the better you will probably be at it. If you do want to start with smaller investments, penny stocks can help you make it happen.
Talk with other investors, and your broker if you have one, to find out more about penny stocks. Speaking with other investors is a great way to have questions answers, as well as pick up valuable information and advice. The more your know, the more informed decisions you will make – and this will help you get that big return that you’re looking for. Can you get big dollars from little pennies? There’s only one way to find out.
Many investors and brokers may claim that investing in penny stocks is a good way to start small and end big. Buying penny stocks means buying low-priced shares of small businesses and companies. Penny stocks are much less “liquid” than other types of stocks, as penny stocks have few shareholders. For some investors, an initial small investment in penny stocks can mean big returns later on.
But penny stocks are considered a high-risk investment. They trade infrequently, meaning that it may be difficult to sell penny stock when desired. There is a chance that, when investing in penny stocks, you will lose your entire investment. For some traders, this type of excitement and risk is simply the name of the game. Others prefer “safer” investments. But the final choice is yours. With penny stocks, can you turn little pennies into big dollars?
Of course it’s possible. With the stock market, anything is possible. Penny stocks are unique in that they are not traded on the big exchanges, rather over-the-counter. Investors who are interested in penny stocks can look for potential investments on Pink Sheets and like documents. Penny stocks are neither approved, nor disapproved, by the SEC. They are legal, but they are risky. They are small investments, for investors who want to make smaller, but potentially more dangerous, investments.
However, some of the claims about penny stocks are true. Shares in penny stocks are very affordably priced, and there is always the hope that this investment will in fact bring in big results. For those who want to get a taste of the stock market, penny stocks may be a good way to start. Learn more about penny stocks, and follow the progress of some penny stocks, to see if this is something you think you’d like to pursue. Don’t take someone else’s word for it, but track the progress of penny stocks for yourself. This is a great way to learn more about not just penny stocks, but the stock market in general. By learning all you can about penny stocks, you set yourself up for future success. The more you know about trading, the better you will probably be at it. If you do want to start with smaller investments, penny stocks can help you make it happen.
Talk with other investors, and your broker if you have one, to find out more about penny stocks. Speaking with other investors is a great way to have questions answers, as well as pick up valuable information and advice. The more your know, the more informed decisions you will make – and this will help you get that big return that you’re looking for. Can you get big dollars from little pennies? There’s only one way to find out.
Penny Stocks: Aren’t All Penny Stocks a Scam?
Most Internet e-mail users have been subject to penny stock scams. There are more than fifty billion spam messages sent each day, and many of these mention investing in penny stocks. Spam isn’t a very reliable investment source, right? Does that mean that all penny stocks are, essentially, some sort of scam?
Penny stock scam is a sad fact of using the Internet. It’s possible for people to lose 8% of their investment when falling for these penny stock scams online. Often, these penny stocks do not exist or they do not exist at the advertised price. This type of scam is called a “pump and dump.” Yes, there are some scams on the Internet that center around penny stocks.
This does not mean that all penny stocks are a scam, or even a bad investment. There are some penny stocks that can make investors a good amount of profit, in fact…just not the ones you find advertised in spam. Stopping yourself from investing in those penny stocks is a great idea, but deciding never to invest in penny stocks of any kinds because of that may not be.
Yes, there are considered a high-risk investment, but it’s also possible to turn a pretty profit by using penny stocks. In most cases, there is a certain finesse needed to invest in these stocks, as they rarely trade and sometimes things happen with penny stocks very quickly. Investors have to know what’s happening all the time and be ready to make a move when needed – making penny stocks somewhat exciting and interesting to trade in. This is why some investors like them.
Don’t let Internet scams scare you away. There are a lot of Internet job scams, too, where so-called “employers” offer to pay you lots of money to do something simple like answer surveys or surf the “Net. In many cases, these “job offers” turn out to be nothing but an Internet scam, and a clever ploy to try and get your hard-earned money. But you don’t let Internet job scams keep you from working – so don’t let Internet penny stock scams keep you from investing. That still means that the scam artists win, because they’re keeping you away from something.
To learn which penny stocks are potentially good investments and which are potentially bad, there’s lots you can do. Check the business journals and stock information, or ask a broker for more information and advice regarding penny stocks. There are good penny stocks out there, and there are investments out there where you can make a lot of money. By doing your research and looking into every possibility, you increase your chances of success in the stock market. And isn’t success what it’s all about?
If you’re interested in investing in penny stocks, you can’t let anything (even scams) stop you. Do what you want to do and invest your money where you think it’s best. After all, it’s your money and only you can decide what you want to do with it. Make the choice for you, not for any other reason.
Penny stock scam is a sad fact of using the Internet. It’s possible for people to lose 8% of their investment when falling for these penny stock scams online. Often, these penny stocks do not exist or they do not exist at the advertised price. This type of scam is called a “pump and dump.” Yes, there are some scams on the Internet that center around penny stocks.
This does not mean that all penny stocks are a scam, or even a bad investment. There are some penny stocks that can make investors a good amount of profit, in fact…just not the ones you find advertised in spam. Stopping yourself from investing in those penny stocks is a great idea, but deciding never to invest in penny stocks of any kinds because of that may not be.
Yes, there are considered a high-risk investment, but it’s also possible to turn a pretty profit by using penny stocks. In most cases, there is a certain finesse needed to invest in these stocks, as they rarely trade and sometimes things happen with penny stocks very quickly. Investors have to know what’s happening all the time and be ready to make a move when needed – making penny stocks somewhat exciting and interesting to trade in. This is why some investors like them.
Don’t let Internet scams scare you away. There are a lot of Internet job scams, too, where so-called “employers” offer to pay you lots of money to do something simple like answer surveys or surf the “Net. In many cases, these “job offers” turn out to be nothing but an Internet scam, and a clever ploy to try and get your hard-earned money. But you don’t let Internet job scams keep you from working – so don’t let Internet penny stock scams keep you from investing. That still means that the scam artists win, because they’re keeping you away from something.
To learn which penny stocks are potentially good investments and which are potentially bad, there’s lots you can do. Check the business journals and stock information, or ask a broker for more information and advice regarding penny stocks. There are good penny stocks out there, and there are investments out there where you can make a lot of money. By doing your research and looking into every possibility, you increase your chances of success in the stock market. And isn’t success what it’s all about?
If you’re interested in investing in penny stocks, you can’t let anything (even scams) stop you. Do what you want to do and invest your money where you think it’s best. After all, it’s your money and only you can decide what you want to do with it. Make the choice for you, not for any other reason.
Penny Stocks: Are They Right For You?
Many people know that the stock market is a good way to invest, and increase, their money. However, playing the stock market is always a risk, and it certainly helps to know what you’re doing. For those wishing to make a small initial investment, the term “penny stocks” may come up, more than once. You may have heard that penny stocks are a great way to start small, and work your way up to being big. But how do you know they’re right for you? How do you know if you want to invest your money in these penny stocks?
Just because someone suggests you buy penny stocks, it doesn’t mean you have to take their advice. In fact, before you invest in anything it’s always a good idea to get some information on your own, first. Find out about the type of stock that’s being suggested, and then look more closely at the specific company that you’re considering investing in. Do your own research instead of just following someone else’s advice. After all, it’s your money – not theirs. Your money means more to you than to anyone else, so it’s only a good idea to look into your own investments instead of just letting someone else do all the work.
How do you know if they’re right for you, if you want to invest in penny stocks? The first step is in finding out more about what penny stocks are. Some brokers make penny stocks sound very safe, as if they always bring in large returns, as if they’re totally great. Perhaps none of this is true. Penny stocks are high-risk investments, and there is some potential for investors to enjoy large returns, but there is also some potential for losing one’s entire investment. That’s what a “high-risk” investment is – a risk. You could lose it all, but you could gain as well.
Because penny stocks are not traded through the large stock exchanges, many don’t know even about the existence of penny stocks. Penny stocks are shares in small companies and are not as “liquid” as other stocks, meaning that fewer shares are traded. Penny stocks are traded infrequently, and this is why some investors fear getting “stuck” with penny stocks that can’t be sold.
How do you know if penny stocks are right for you? Do your homework, do your research. Look closely at the penny stocks you want to buy, and learn more about buying and selling this type of stock. Your broker is required to give you certain paperwork and information on penny stocks, before you ever put your money into them. Look over this information carefully before making your decision. If you like the risk, if you like the gamble, if you like the potential, then penny stocks may be the right investment for you. Find out all you can about penny stocks, or any investment, before you throw any money that way. When you make an informed and educated decision, there is a smaller chance that you’ll regret your decision later on.
Just because someone suggests you buy penny stocks, it doesn’t mean you have to take their advice. In fact, before you invest in anything it’s always a good idea to get some information on your own, first. Find out about the type of stock that’s being suggested, and then look more closely at the specific company that you’re considering investing in. Do your own research instead of just following someone else’s advice. After all, it’s your money – not theirs. Your money means more to you than to anyone else, so it’s only a good idea to look into your own investments instead of just letting someone else do all the work.
How do you know if they’re right for you, if you want to invest in penny stocks? The first step is in finding out more about what penny stocks are. Some brokers make penny stocks sound very safe, as if they always bring in large returns, as if they’re totally great. Perhaps none of this is true. Penny stocks are high-risk investments, and there is some potential for investors to enjoy large returns, but there is also some potential for losing one’s entire investment. That’s what a “high-risk” investment is – a risk. You could lose it all, but you could gain as well.
Because penny stocks are not traded through the large stock exchanges, many don’t know even about the existence of penny stocks. Penny stocks are shares in small companies and are not as “liquid” as other stocks, meaning that fewer shares are traded. Penny stocks are traded infrequently, and this is why some investors fear getting “stuck” with penny stocks that can’t be sold.
How do you know if penny stocks are right for you? Do your homework, do your research. Look closely at the penny stocks you want to buy, and learn more about buying and selling this type of stock. Your broker is required to give you certain paperwork and information on penny stocks, before you ever put your money into them. Look over this information carefully before making your decision. If you like the risk, if you like the gamble, if you like the potential, then penny stocks may be the right investment for you. Find out all you can about penny stocks, or any investment, before you throw any money that way. When you make an informed and educated decision, there is a smaller chance that you’ll regret your decision later on.
Penny Stocks: Are Penny Stocks Too Risky?
The term “high-risk investment” sounds scary, doesn’t it? This phrase alone is enough to put many investors off. After all, no one wants to take a risk. The trouble with buying any kind of stock (high-risk of not) is that it’s always a gamble. But how do you decide when a stock is just too high-risk, for you?
There is a lot of information floating around on the Internet about penny stocks. Almost everyone with an e-mail address has gotten spam at some time or another, touting a penny stock as the next great investment. Sadly, much of this information is geared toward scamming you in some form or fashion, and it’s likely that you will lose all of the money that you put into the stocks advertised in this fashion. But that doesn’t mean that all penny stocks are bad deals, that you will lose money every time, or that every single penny stock is a scam. In fact, far from it. Some penny stocks might be very good investments, indeed.
Penny stocks are affordably priced shares in companies or businesses that are considered “small,” as opposed to big corporations. There are not many shareholders involved in penny stocks, making them less “liquid” than many other types of stock. The goal of investing in penny stocks it to part with very little money initially to enjoy a big return later on. Does it work this way? It does, sometimes, just not all the time. For those who know what they’re doing when they’re investing in penny stocks, they can be a great investment tool. Mastering the art of trading in penny stocks can be tricky, however.
For one thing, penny stocks don’t trade on the major stock exchanges. Rather, penny stocks are known as “over the counter” investments, listed on Pink Sheets and the OTCBB. This makes penny stocks rather unique, and somewhat harder to find for many investors. Penny stocks also don’t trade very regularly, so sometimes investors have very little time to act. Because trading does not occur often with penny stocks, there is always the fear of being unable to sell one’s shares of penny stocks and winding up with a bad investment. This is all part of the risk of trading in penny stocks, and many investors think this makes the game all the more challenging. When you invest in penny stocks, you should receive monthly updates that let you know how your stock is doing.
So, are penny stocks too risky? The only person who can decide that is you. Some investors find that penny stocks aren’t too risky, but others do. It’s all a question of how much gambling with your money you want to do, how much you know about penny stocks, and how lucky you feel. If you think investing your money in penny stocks is a good idea, then it probably is. Everyone has a different opinion on penny stocks. Learn more about them, and form your own.
There is a lot of information floating around on the Internet about penny stocks. Almost everyone with an e-mail address has gotten spam at some time or another, touting a penny stock as the next great investment. Sadly, much of this information is geared toward scamming you in some form or fashion, and it’s likely that you will lose all of the money that you put into the stocks advertised in this fashion. But that doesn’t mean that all penny stocks are bad deals, that you will lose money every time, or that every single penny stock is a scam. In fact, far from it. Some penny stocks might be very good investments, indeed.
Penny stocks are affordably priced shares in companies or businesses that are considered “small,” as opposed to big corporations. There are not many shareholders involved in penny stocks, making them less “liquid” than many other types of stock. The goal of investing in penny stocks it to part with very little money initially to enjoy a big return later on. Does it work this way? It does, sometimes, just not all the time. For those who know what they’re doing when they’re investing in penny stocks, they can be a great investment tool. Mastering the art of trading in penny stocks can be tricky, however.
For one thing, penny stocks don’t trade on the major stock exchanges. Rather, penny stocks are known as “over the counter” investments, listed on Pink Sheets and the OTCBB. This makes penny stocks rather unique, and somewhat harder to find for many investors. Penny stocks also don’t trade very regularly, so sometimes investors have very little time to act. Because trading does not occur often with penny stocks, there is always the fear of being unable to sell one’s shares of penny stocks and winding up with a bad investment. This is all part of the risk of trading in penny stocks, and many investors think this makes the game all the more challenging. When you invest in penny stocks, you should receive monthly updates that let you know how your stock is doing.
So, are penny stocks too risky? The only person who can decide that is you. Some investors find that penny stocks aren’t too risky, but others do. It’s all a question of how much gambling with your money you want to do, how much you know about penny stocks, and how lucky you feel. If you think investing your money in penny stocks is a good idea, then it probably is. Everyone has a different opinion on penny stocks. Learn more about them, and form your own.
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