What are penny stocks? Why people are interested in such stocks that seem so inexpensive? In official terms, penny stocks are the shares that are offered in financial market for people to buy it, but this type of stocks are not traded in any formal stock exchange rather penny stocks are available on a dealer network like over the counter known as OTC. Penny stocks are the shares that have made significant capital gain to be publicly traded but not make sufficient to be on larger well known stock markets
The main reason behind why penny stocks are available over the counter is that specific penny stock companies have comparatively small turnover and can’t fulfill the financial conditions of the formal stock exchanges. Penny stocks are not usually listed on any formal exchanges, as they are traded by some dealers who transact over the phone or on online network.
Penny stocks are priced between dollar one to dollar five a share. Sometime many people get confused with penny stocks and listed stocks that recently have fallen price less than dollar 5 a share due to market trends. If you are not aware of a particular company is a listed company or a penny stock company, find out company’s stock code. Company name having code OTC or OTCBB, generally trade over the counter. Click here to read more on trading penny stocks through good research.
Trading penny stocks is more like gamble; if you don’t aware of risk involved in transaction of penny stocks, don’t go for any kind of online trading. The basic formula is simple, you just need to make judgment that your invested money can give you worthwhile returns or not. Trading penny stocks is a great way to enter in stock market; they have value of less than a dollar or may be even lesser. Penny stocks are offered by new small scale companies. These companies offer such stocks because they are seeking funds for expansion, sometime for start-up or may be for basic operations.
For investors who think that penny stocks are easy method of earning big profits, this is not entirely true. Financial gains are possible, but to make them happen, one should be ready to take risks. Price of penny stock fluctuates very frequently, such shares are majorly depends on market promotion and speculation. Prices may go up as and when interest rates go down or vice versa.
Penny stocks are known by different names such as pink sheets. Although they are risky in nature; but can be proved very profitable for professional trader or investor. They have some short term benefits over the tradition stocks. Penny stocks are cheap in nature, even they are recommended for those people who want to buy the cheapest stocks.
Stock market analysts do not cover penny stocks; this makes penny stock companies to dependent on promotional campaigns to spread the information for their stock. Penny stocks are the hot stocks of financial market. New emerging companies …
Trading penny stocks may be complex business to deal with. You have to keep in mind that not all penny stocks can be treated as equal. The good penny stocks have some particular trading criteria. One should certainly focus on such criteria. Before trading one should know what is meant by a penny stock as there is lot of confusion on term penny stock. Penny stocks are trading under $ 5 per share. Penny stock is not restricted to those shares that cost a penny per share.
So let’s discuss three particular criteria for penny stocks trading that you keep in mind while dealing with them.
- Firstly penny stocks should have good trading volume, if trading volume is poor; chances of manipulation in stocks are more. Learn more on how to pick penny stocks here. Shares with low trading volume can be moved by any individual dealer. These low volume stocks can be moved in opposite direction by a well capitalize investor. You have to determine the exact volume of penny stocks on daily basis.
- Second criteria you should trade penny stocks with a narrow spread, spread here means difference between bid and ask. You will see that good volume stocks have tighter spread. If you deal as active investor time makes lot of impact on your profitability.
- Thirdly user should focus on such stocks that have feedback of some positive news in recent times. The positive news can work as motivation for investors. Usually positive news makes significant rise in the price of stock, however during some point traders start selling shares that can cause downward price value.
If you follow these three criteria you’ll be able to find some good penny stocks. Just be sure you have an exit strategy if value of shares continues to fall. Make a sound strategy for trading Penny Stocks.…
Penny stock trading is a unique kind of stock trading that requires some good research. Such stocks are high risk shares, they cannot be easily found on stock list. There are many penny stocks in the market that are undervalued because of lack of awareness, so try to find good penny stocks that are not undervalue and gather necessary information about them to guess which ones can give you considerable profits. Information of each penny stock is very difficult to collect, you should not invest heavy amount of one type penny stock, as these companies can go out of business very easily. Get to know more about trading penny stocks by clicking here.
Careful internet research can help you a lot in finding penny stocks. Some people only make compile lists of penny stocks those people can be found with simple internet research. Make sure these sources are trust worthy.
When you get your list of penny stocks, you can’t simply invest your money in the stocks given on the list, as this list can’t guarantee success, you need to be very careful before investing money on each penny stock. Some of penny stocks may be listed by fake people who just want to make money from investors. The majority of companies that offers penny stocks are small corporations that are trying hard for startups.
You need to work hard to find right penny stocks for you. Just start using information giving on internet to find out some common loser companies. Testimonial given online can be of little help. To figure out more relevant information you can call business bureaus, don’t feel shy to make call to companies. Try to find out what kind of business they are doing; try to know the future prospect and area of operation of particular company. If you want to do successful penny stock trading, always do your research.…
You might have heard anyone’s story that made their future by investing in penny stocks. These stories may make you assume that making loads of money from trading penny stocks is very easy, but it is not that simple. Below is the important information how to invest in penny stocks.
These stocks are named as penny stocks because their value was worth a penny earlier and this has been part of American markets from 19th century. You may earn huge profits by trading such stocks, but with high risk involved. This also can leads to big loss, so be careful. You can view more on penny stocks facts and information here. Penny stocks use to trade outside the formal stock exchanges.
If you want to add penny stocks into your portfolio, you need to assess the risk factor. You should start with ten percent of your complete portfolio into such type of stocks. If you want to earn big be ready for greater risk.
Some lucky people may be able to earn more without exploring much information of penny stocks, but you should not follow there footstep, find out as much as you can, traders who don’t do complete research often lose. Try to deal with a professional broker who has the complete information of penny stocks.
One must get familiar with the companys financial position that offering penny stocks. Find a company with a good business records, sound cash flow, should have convincing business plan with good future prospect. If you don’t satisfy with companys conditions don’t invest in their shares.
Penny stocks are not traded on stock exchanges; they are available over the counter. You may deal through a broker who may charge commission for each transaction. Keeping in mind all these points make a good plan to deal in penny stocks and make a lot of money.…
In beginning trading penny stocks can be tricky if you don’t know about the market conditions. Just follow the advice of those resources that have reliable track record. Although time is but there is still a hope to make money through trading penny stocks.
You need to learn how to pick penny stocks to make profits without losing anything.
- Try to find right source of advice for trading penny stocks. You might choose reputed newsletter that has been around for a while. There are also some stock analysis programs available, that can give you idea of your return on investment over a certain period of time. Click here to read more tips on making money from penny stocks.
- Newsletter provides you full information on different kind of subscription that you can opt for. You can also decide in advance date and time when you want to receive the picks. Best option is that you should get the alert in night so that you can plan the trading for next morning,
- There are various scam blogs over internet discussing about worthy penny stock picks, beware of such blogs. They can be very misleading sometimes. Some people set up these blogs to scam others. Stay away from such scam blogs.
- Don’t rely on promoters. Promoters just buy penny stocks in large amount to influence the stock market, it may give undesirable effect and you can lose great amount of money. To make sound money from penny stocks you should be smart enough in dealing with penny stocks.
- Don’t follow penny stocks investing forums very frequently. If you search the internet you may find people who lose money by following such forums so watch out some reliable source of information.
If you have good source of help like expert advice or a newsletter then you can definitely pick good penny stock and earn money.…