What are Penny Stocks?
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Penny stocks are shares in companies that trade for under $5 a share on average. They are low cost and tend to be a bit unpredictable as the companies are just starting out. Penny stocks are traded in the over-the-counter (OTC) market, but can occasionally be found in the New York Stock Exchange (NYSE).
If you are looking for an affordable way to get into the stock market penny stocks are a great option. The risks are there in any type of financial trading, so it’s important to always do your research before jumping in. With the right knowledge and research, penny stocks can make you some really substantial returns.
Buying Penny Stocks… Where to Find Them.
Any stockbroker can assist you in investing in penny stocks. As I previously mentioned, penny stocks are typically traded on the OTCBB or listed in Pink Sheets. Every once and a while you can find them on the NYSE or NASDAQ, if they maintain a certain value over time.
When considering buying penny stocks, the OTCBB is one of the better platforms to search. The OTCBB is registered with the U.S, Securities and Exchange Commission (SEC) and as a result, they have a standard set of requirements for stocks that trade on their platform. Pink Sheets is not registered with the SEC, they are just a quotation publisher, so stocks in their database can carry a bit more risk.
What are the Advantages of Penny Stocks?
One big advantage is the price point. If you do your research and feel good about a particular stock, you can purchase a lot more shares than if you were to invest in a bigger company. If those stocks go up by just one dollar, you can make a significantly larger return on your investment.
The best way to see the advantages is to practice. one way to do that is with a stock market simulator. This is also known as Paper Trading. The benefit of Paper trading is that you don’t need to invest any real capital. You can practice and see first hand if you are making solid choices, before diving right in.
How do I Find the Best Penny Stocks?
You find the best potential penny stocks by once again, doing your research. One great spot to find the best penny stocks is over at Raging Bull. They are a website set up to teach you all the ins and outs of any type of Financial trading. They have the tools, advice, and training to get you where you want to be. If you are interested in more on penny stocks, go check them out.
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