Tag Archives: What are penny stocks

What Are Penny Stocks? Here is a quick Q and A page

What are penny stocks and how can you buy them? Here are some commonly asked questions about penny stocks

What are penny stocks?

Penny stocks are companies that are not listed on a major exchange like the Nasdaq. Some people consider any stocks under $5 a penny stock while others consider those micro-cap stocks and won’t call a stock a penny stock unless it is trading under $1 a share. Penny stocks are usually companies that fall short of the basic requirements to up-list on a major exchange.

How can you buy penny stocks?

Some brokers actually won’t let you buy penny stocks because they believe the risks are too high and they don’t want to pay the extra fees that brokers have to pay with OTC stocks. We recommend ordering a brokerage account with Etrade. There are a lot of people starting out that like Robinhood because there are no broker fees but you are very limited with the stocks that you can buy with Robinhood. Etrade or Scottrade are much better brokers to use.

What are the top or best penny stocks to buy?

This really comes down to individual trading style. We like low float stocks because they have the potential to move the quickest. We also pay attention to what sectors are hot. A lot of times entire sectors will move at the same time. Look for hints in SEC filings. Remember most penny stocks move based on market awareness and exposure and not necessarily how solid a company is.

Where can you find a list of penny stocks?

We have several lists of different type of penny stocks listed on this site. You can click on any of the drop-down list above on the menu and find the sector you are looking for. Also, check out our penny stocks of the month page. This will give you some great information on which penny stocks are hot!

 

Penny Stock investing is sometimes considered one of the trickiest ventures and if a person is not careful they could end up Losing a lot of money. Some people view penny stock investing as a way of diversifying their investments. It is a very risky investment that does not require a lot of money to do.

Pointers to buyers

For beginners and rookies, it is important to find out why a stock is considered penny stock in the first place. There is usually a reason why stocks are priced so low. In most cases, the companies are not well enough established yet.

Penny stocks are high risk and high reward. You can start off with a small amount of money and if you play your cards right, you could end up making a lot of money. This is because you don’t need a lot of start-up money to begin trading. Financial advisers are keen to inform beginners not to put all their money into one bag. While these penny stocks can be a noble way of quantifying investments, there can be risks too and therefore it is advisable to split investments to be on the safe side.

How to choose a brokerage firm for penny stock investing

First and foremost, do a thorough research to ascertain that whoever you are dealing with is a legit firm. There are so many fraudsters out there targeting rookies and new investors and no one wish to begin on a wrong footing.

Take time to find a brokerage firm with a proven track record in sorting out its finances and taking care of its revenues. Transparency is paramount especially in this form of investment and if a company is not willing to be clear with information then certainly something fishy is going on. The same company must be open with its finances to make it clear for potential investors and at least to win their confidence. No one wishes to lose their hard-earned money easily.

For the sake of saving time, enquire from friends who perhaps might have had successful spells with their brokerage firms. A friend will always be handy to provide clear information without being bias. Penny stock investing can be quite appealing especially when some companies have been mentioned but the history of the company should be put under the microscope. Companies come and go and when they do, they disappear with investors money and there is nothing to be done.

Beware of hidden broker charges that may pop up later after signing all the paperwork. Your chosen broker must put everything on the table and if possible an attorney must be present to oversee any transaction or as a signatory whenever there is doubt.

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Top 10 Penny Stock List

Top Ten Penny Stock List

You see them online everywhere: lists containing pink sheet information on the top penny stock companies, and you probably wonder what it means.  Well, the significance of the list may be seen in two perspectives: the company and the trader.

As we analyze these perspectives, know that you will not expect to see company rankings here.  The list changes every few minutes, so it is best to focus our discussion on how the information found on these rankings will help you.  Here is a guide to using the information offered by top 10 penny stocks lists.

On the company perspective.  Initially, companies make it to the penny stock exchange list by initial public offering or IPO.  This is the start of the company’s life in trading. It is safe to say then that a company’s financial strength and longevity in the industry it’s under can be determined from its performance in rankings.

In this case, it really does not matter if it continues to be on the top 10.  What matters is its consistency in keeping its place as among the best companies to trade with.  So apart from giving a startup company the boost it needs, it also tells investors about how it is moving positively based on its business plan.  The same principle applies to a company being bought by another larger company.  Note here that penny stocks are held by publicly traded companies where most of them are just starting out as businesses.

On the investor perspective.  Most traders would always want to trade with reputable companies.  These are big companies whose names are already popular.  However, because penny stocks are traded over the counter, it will probably be difficult to do that unless an investor moves to the customary manner of trading regular stocks in the stock exchange market itself.  So when investors participate in penny stock exchange, they will be exposed to start-up companies or those that have just emerged in the market.

Since consumers drive the direction of a business, investors will not expect a definite business plan.  This is where the risk comes in. Until such time that a company stabilizes, it can then define its business goals.  So the advantage of looking at the top penny stocks list is it boosts investor confidence.  This is with the knowledge that the investor will have a way of accumulating capital by trading with a new company who holds promise in terms of financial merits.

So how will you know who’s making its position in the list?  You can simply put a search online for the top 10 penny stock lists.  If you are doubtful, you can set your email up to receive daily newsletters containing updated information about the stock market.  If not, forums dedicated to penny stock exchange are also an option.  Now remember, because the stock market is highly volatile, the information you see may change all of a sudden just when you are about to execute a trade, so keeping yourself updated is a must.

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