What are Penny stocks? Penny stocks are common shares of small public companies that are priced at less than $ 1.00. These penny stocks have very low liquidity. When entering to this penny stock exchange, one should be very much aware of all aspects of penny stock investing and trading. You should read the penny stock guide and also consult your stock broker for investment purposes. Always remember that it’s your money at stake, so take the decision very wisely and patiently. You should know well about where do penny shares trade and how to trade these penny stocks?
Investment in Penny stocks –
There are many legal places where these penny stocks can be traded. Three of them are NASDAQ Small Cap Market, American Stock Exchange (AMEX) and Pink Sheets. These are the safest places to trade the penny stocks as they work on strict compliance policies. The penny stocks cannot be traded in the normal stock exchange but have to be traded in the Over the counter market. The broker is the best person to help you with the trading formalities. You will have to hire him for performing the transaction activities on your behalf. For trading the basic thing that you need to have with you is a bank account with sufficient amount of cash in it as you will have to bear the broker’s commission along with the trading cost of the stock. The next thing you will have to do is to inform your broker whether you want to buy the stock at a market price or you want to a set a limit for it. Market order is the order where you can buy a stock right at the price at which it is available in the market at that particular point of time whereas in the limit order you can set a limit for the stock.
For e.g. If you feel the stock is available at a higher rate at the moment and you want its rate to go down by a couple of dollars and then buy it. In this case, you can set a limit price for the same and as soon as the price will fall down to the rate that you have mentioned, your transaction will be executed and you will be allotted those many stocks at the rate of your choice. In this way, you can earn more profit provided you have a good knowledge about the market and you are sure that the price is going to fall. The experience of the broker matters to a great extent in the investment and trading purposes. He can assist you with the best penny stocks online and also with the buying and selling of the stocks at the right time only when he has good knowledge about the market and is well aware of the market trends from a long time. He should have sound knowledge on artificial penny stocks. This is a form of microcap stock fraud in which the price of a stock is increased with fraudulent schemes and false statements for a limited period of time and when it falls to its original price, people get trapped in it and at times have to bear huge amount of losses.