Stock trading is very speculative. There are penny stocks and ordinary stocks classified in order of the market capitalization and per stock value of the company’s shares. Mostly, the price of penny stocks is less than $5. These securities are low priced and have high volatility rate. Blue chip stocks are a kind of more reliable than penny stocks available on pink sheets or OTCBB.
The major differences between penny stocks and major stocks are as follows:
- Risk Factor: Penny stocks are very risky and speculative. These are projected and marketed on the immediate basis, which makes them highly susceptible to bring losses. The risk factor involved in penny stock investments depends on the inflation or deflation of the stock prices.
- SEC Rules: Penny stocks are issued by small companies and they don’t follow the transparent transactions, which increases their chances of getting fraud. There are many chances that the stock companies associated with them don’t follow SEC rules or illustrate their plans and financial statements for a better look.
- Market Information: Penny stocks have the major con of not defining the information in its true sense. Some of the owners only focus to get a lot of money by following pump and dump scams. It makes the pink sheets market susceptible to losses. You can’t earn money with the wrong stocks and this is what matters the most in terms of penny stock investments. Blue chip stocks are secured in the sense that there is ample of information available online and the investors get time-to-time reporting about the company’s stats.
- Trading Locations: Penny stocks are not traded on major stock exchanges. These are sensitive as their location is Over the Counter (OTC) or pink sheets. The security level of these stocks is relatively lesser and these are risky in terms of investment to be made to earn higher ROI.
- Strategy for Investment: Penny stocks and normal stocks have different investment strategies and goals. These are invested by speculators having an urge to earn money in short term. The fact is that there are times when these short term stocks actually get stuck up with inexperienced trading methods. Only a very few penny stocks are reliable and the major task of the investors is to look for the best stocks which can probably give positive results to the investors.
Penny stock investments can make you rich or even lose all your money within a short interval. The risk level is high and you can get best advises from experts through paid tips. Free tips are available all over the web and they will actually bring losses for you in the long run. Right investment can prohibit losses and make you feel great.
Penny stock trading is different from ordinary stock trading as the performance level, associated risks and security are not the same. However, you can trust a good company and buy its stocks for growing gradually with them. Learn to understand the company’s policies and make deep analysis before taking the final decision to invest in penny stocks.
Understanding Pink Sheets
The first thing for traders is to understand what penny stocks are and how these are traded in the market. There is a lot of research done for penny stock investments and new investors believe that these stocks make very good money for the investors. They come up with low capitalization stocks which are tricky to regulate and have chances for fraud.
Safety of Penny Stocks
Penny Stocks are highly speculative and lack liquidity levels. Always look out for the stocks having good trading volume. It is essential for the investors to check out the history of the company in which they are investing. The stocks traded on OTCBB or Pink sheets have less probability to excel because these are micro caps belonging to beginner companies or the fraudulent organizations. It is tough to think that these stocks belong to frauds, but it is genuinely true. Penny Stocks are highly unpredictable and volatile in nature.
There are a few stocks having value of a few cents. Some investors consider the selected stock trades only to grab thousands of stocks by spending lesser amount. These stocks from tiny companies are genuine in the rarest cases. Pink sheets were established in early phases of 20th century and since then, there are many good and bad cases reported with these companies. The publications got their names from the printed colors of the sheets and till now, these are termed as penny stocks. It doesn’t include the company’s information and hence, these are highly unpredictable. Most companies included in pink sheets are unsecured and don’t report to SEC (Securities and Exchange Commission).
Blue chip stocks are reliable than penny stocks. It doesn’t mean that you shouldn’t trust any new company for trading. If you are sure about the plans and financial status of any new company, it is quite feasible to get high ROI by investing in them.
Penny Stocks and Pink Sheets
Penny Stocks reside on Pink Sheets or OTCBB. Most companies in this niche are small companies trading at lower pricing and volume. Market capitalization of penny stock companies is on lower side. The companies included in OTCQB and OTCQX tiers are considered for micro cap stocks.
Most of the companies in pink sheet lists meet minimum listing requirements for getting covered. The chances of losses are on higher side as pink sheets don’t define the financial statistics of a stock. There are many companies close to bankruptcy and it becomes a risk for such organizations. Investors need to make fullest research about the companies on their own to avoid risks in the investments. Micro cap stocks are highly volatile and affected by price manipulation. It is important for bringing the stocks on right positions and you need to check out your own picks to make the final decision.
Investors should make informed decisions for pink sheet stocks. It doesn’t mean that you should never purchase these stocks. There should be fullest research and analysis done to purchase penny stocks.
Speculations and Stocks Picks
The stock picks from experts are available online. You can’t simply rely on these suggestions without applying your mind and hard work. Your own paper work is necessary to make the right move. You can go ahead with the market speculations and make your own list of the most rewarding stocks. It doesn’t mean that you can independently get all the speculations. There are thousands of penny stocks in the market and experts list out the best among them. Now, your task is to find out the most rewarding stocks among these stocks to create your own picks.
Beware of the unworthy stocks on the pink sheets, which can probably ruin all your bucks. Your investments should be well informed and reliable to gain from investments.
How does Penny Stock work?
Penny stocks dynamically work like the conventional stocks. They are different only with respect to their placement and price per share. People buy and sell stocks according to the ups and downs in the market. The news about stocks creates a huge impact on the decision of the penny stock experts. It makes people to sell, hold and add the stocks on various positions. Penny stocks are usually traded on the OTCBB or Pink sheets instead of the normal stock markets.
Penny stocks belong to the small scale companies having low market capitalization. The promoters of some companies craft newsletters and emails to promote a particular stock. The target is to make more people buy these stocks and invest higher amount into the particular company or market. The price fluctuation on penny stocks is due to the market movement. The investors trust some companies and make investments to become share holders.
Penny stocks are risky. Although the pricing is low per stock and you can hold a large number in the account, there is more volatility in the account. Major stock exchanges are different than pink sheets as they have information of the stocks enlisted on the records. Penny stocks include a lot of scams and stock promoters are not always honest. They tend to take all the money from the promoters for pump and dump scam. The people speculating penny stocks need to be careful as most of the stocks are unworthy. You will find only one good stock from the list of thousands of stocks available. There are many cases of duped investors, but on the same time, many millionaires are the resultant of investing in penny stocks.
Penny stocks can make good money for long term and short term investments. Your diligence on stocks is necessary to make the right move.
Know the best penny stocks suiting you
Investing in stock market can be a great idea. When you have debts or need of surplus money, penny stocks are the best to invest. However, there is no stock which can guarantee you for its success. Stock market is unpredictable, but if your investment ideas and strategies are well defined, there are least chances for you to get failure. You can rise on the top as an investor only if you are sure about giving your time and energy to analyze the particular stocks. The major question for investors is to determine the best stocks for investment. It is hard to find out the best stocks from a list of thousands of options available. Penny stocks in businesses are always worthy and you can earn ample amount of bucks with your right investments.
Penny stocks are risky and acquiring them will be a matter of risk for you. The unique thing about stock market is that there is a lot of competition involved in it and you can gain massive advantages with best ways to invest. Buying stocks is simple, but purchase of right stocks is not always easy. You need to research and develop your own stock list to do the same. The aim of traders is to maximize the profits and minimize the risks and it is feasible only if the informed decision is made. You need to make sure that your investments are highly fruitful. It is integral to look for the stock movements and find out the daily trade status with the trade volumes. Penny Stocks are associated with volume trades as the investor can own a lot of shares by spending only a hundreds of bucks. These manipulative stocks should be looked on carefully to avoid any losses and daily trade status with trading volumes needs to be calculated to make the informed decision.