OK so you've heard about penny stocks and how the returns can be staggering. However, investing, especially penny stock investing, is NOT a get rich quick scheme. This is real business that some of the world's richest and most powerful people use every day to earn a fortune.
So what exactly are Penny Stocks and how can you make money trading them?
Penny stocks are those priced at $5 per share or lower, not issued by an investment advisor such as a closed-end fund, and not listed on a national exchange. They are usually issued by smaller companies, which get little or no analyst attention or other market notice. Penny stocks are those stocks that are price under $5. Many people think that penny stocks are micro caps with capitalization of less than $250 million and this means that they are capable of creating wealth. Penny Stocks are stocks that usually trade below $5 per share. Sometimes these stocks are sold for just a fraction of a cent.
Penny stocks are extremely cheap to purchase and they have a small chance of delivering an extremely high return on investment. But, more than likely, penny stocks simply are a high risk investment gamble in which you lose money. Penny stocks are speculative securities of very small companies, priced below $5, and generally trade over-the-counter, such as on the OTC Bulletin Board or in the Pink Sheets. Penny stocks may also trade on securities exchanges, including foreign securities exchanges. Penny stocks are very low in price which gives the small investor the opportunity to participate in them. A penny stock offers more leverage than a high-priced stock if things went right.
Penny Stocks are named that way for a reason. While each one of us starts dreaming about investing in the next big thing, the thing is our chances are slim on finding such a success story. Penny stocks are the fast movers of the stock market. While large stocks such as IBM and Microsoft lumber along like the giants that they are, penny stocks often race around like Ferraris. Penny stocks are usually traded on the OTCBB or on the Pink Sheets. The OTCBB (OTC Bulletin Board) is an electronic quotation system for over-the-counter securities that are not listed with one of the national stock exchanges.
Investing in penny stocks is risky just like any stock market investment. But due to the small startup investment, and enormous earning potential if you hit the big time . Investing in penny stocks is speculative business and involves a high degree of risk. Often, brokers will enhance the new account card to make it seem that you are suitable for a penny stock investment when you are not.
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