Want To Know What Penny Stocks To Buy? Look Inside....
Penny stocks have been around since the 19th century, and they've also been a big part of the American investment system ever since they developed. This era is actually the one that gave these stocks their names, as modern penny stocks cost far more than a penny. They average between ten cents and five dollars apiece in modern money. Why don't we take a look at some of the risks you'll encounter when dealing in penny stocks, then ways they can help you turn a profit.
Penny stocks are share offerings made by companies that are either too new or too small to be listed in the major exchanges. These have a potential to grow a lot for a relatively small initial investment, but they can also be part of unpleasant pump and dump schemes. Like anything else in the over the counter (OTC) market, the buyer should beware.
Choosing penny stocks in a reasonable fashion means having the business model of the company selling them independently appraised. This is like buying shares in any other company that's being publicly traded. It's important to understand the company's business model, what they're doing, who's competing with them, what they make and what products are being offered.
One of the most appealing things about penny stocks is that the majority of businesses offering them are quite simply put together. One typical type is that of a mining company, which will only be profitable when the price of the material it mines reaches a certain level. There are also some oil exploration stocks which use this kind of valuation.
Penny stocks are rated as a high risk vehicle by the Securities and Exchange Commission. Some of the risks involved include incomplete or indirect reporting of finances, fraud, and limited liquidity. People playing using a day trading strategy, sudden demand on penny stocks can create wide ranging volatility, which also makes it hard to short sell them.
The reporting guidelines on penny stocks are a lot less strict than they are for stocks listed on the national exchanges. In fact, some stocks will just delist for a few days. In the investment type known as the Pink Sheets, there's almost no regulatory requirement on penny stocks, no minimum accounting standards or reporting guidelines.
Due to this lack of standardization, this kind of stock is extremely vulnerable to being manipulated and even used for fraud. People posing as independent observers will use their influence to run up penny stock prices, then they'll sell and delist the stock. This is the classic scam referred to as pump and dump.
That doesn't mean you should be scared away from these kinds of stocks completely. There are plenty of reasonable startup companies, and they need somewhere to start. If you're able to pick a winner out of them, you'll get a significant return.
If you're able to spot a company with lots of promise, you could get an enormous payday. Even if you lose four out of five of your picks, the single winner you get will give you enough to forget about the other losses.
Penny stocks are share offerings made by companies that are either too new or too small to be listed in the major exchanges. These have a potential to grow a lot for a relatively small initial investment, but they can also be part of unpleasant pump and dump schemes. Like anything else in the over the counter (OTC) market, the buyer should beware.
Choosing penny stocks in a reasonable fashion means having the business model of the company selling them independently appraised. This is like buying shares in any other company that's being publicly traded. It's important to understand the company's business model, what they're doing, who's competing with them, what they make and what products are being offered.
One of the most appealing things about penny stocks is that the majority of businesses offering them are quite simply put together. One typical type is that of a mining company, which will only be profitable when the price of the material it mines reaches a certain level. There are also some oil exploration stocks which use this kind of valuation.
Penny stocks are rated as a high risk vehicle by the Securities and Exchange Commission. Some of the risks involved include incomplete or indirect reporting of finances, fraud, and limited liquidity. People playing using a day trading strategy, sudden demand on penny stocks can create wide ranging volatility, which also makes it hard to short sell them.
The reporting guidelines on penny stocks are a lot less strict than they are for stocks listed on the national exchanges. In fact, some stocks will just delist for a few days. In the investment type known as the Pink Sheets, there's almost no regulatory requirement on penny stocks, no minimum accounting standards or reporting guidelines.
Due to this lack of standardization, this kind of stock is extremely vulnerable to being manipulated and even used for fraud. People posing as independent observers will use their influence to run up penny stock prices, then they'll sell and delist the stock. This is the classic scam referred to as pump and dump.
That doesn't mean you should be scared away from these kinds of stocks completely. There are plenty of reasonable startup companies, and they need somewhere to start. If you're able to pick a winner out of them, you'll get a significant return.
If you're able to spot a company with lots of promise, you could get an enormous payday. Even if you lose four out of five of your picks, the single winner you get will give you enough to forget about the other losses.
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