Penny stocks refer to the very low securities that is charged by the company and that is supposed below $5 per share. Often times these stocks have fallen to a large extent from higher prices and now trade sparsely with low dimensions. Penny
stocks are traded on OTCBB or Pink Sheets.
True Facts about Penny Stocks
Many new investors are tempted to buy a penny stocks due to the low price and prospective for quick growth only in some days. But there is also some risk of severe loss and many penny stocks go down their
entire price in the long term. So one thing can be stated that this scheme is high risk investments and so new investors should be aware of the risks concerned. The consumer can face such problems like limited liquidity, lack of financial reporting,
and scam. Shortage of liquidity and volatility also makes penny stocks much more vulnerable to manipulation.
Any unexpected changes in demand or supply of penny stock can lead to instability in the stock price up or down. A deficiency in of liquidity can also make it very difficult to trade a stock, mostly if there are no buyers that day. This can also
make the stock extremely difficult to short.
Finding the Right Penny Stocks to Buy
Before purchasing the shares of any company you should undertake some steps like make some research to find the right one stock. Proper carefulness is essential therefore.There are numerous websites that will
facilitate you with your DD and you can find a catalog of useful ones at Stocks Reporter website.
Before investing in any company you should look the following points about a company.
•Financial track record
•SEC filing
•Share structure: AS (Shares Authorized) OS (Outstanding Stock) and Float.
•Transfer agent authenticity
•Competitive position in its industry
•Business presentation
•Paycheck supremacy
•Assessment of the company
It is good for the company that has maximized the OS and is close to AS.Watching Level 2 will also give you good indication if there is any dilution from the company. A good strategy should be pursued insiders who know
the company better than anyone else.
Buying Penny Stocks is risky business and yet it can be very profitable. A penny stock is a stock that is either priced for fewer than five dollars, or one-dollar stocks. Penny stocks are only traded on the over-the-counter (OTC) market. There are
six steps you should take before buying penny stocks.
The first step is to get information by asking a broker for written data and recommendations on penny stock companies.
The second step is to find a good broker by doing some research about their history and their track record in investing. Also check to see if there have been any complaints made against them.
The third step is to keep good records. Ask your broker to send you a written copy of all predictions about the price of a stock and about the prospects for the company. Keep notes about each broker. Get other opinions about the stock and the
company from people who should know including a banker, other stock brokers, and financial planners.
The fourth step is to use common sense. Question yourself as to why the broker is offering these to you. Remember, if something is too good to be true, it probably is.
The fifth step is to not be rush to make a purchasing decision. If there is not adequate time for you to check out each stock investment carefully, do not invest.
The final step is to satisfy any concerns or questions about any potential fraud that may be occurring with an offer that is made to you by contact state or federal securities regulators.
It is important to note that investing in penny stocks can bring you extremely good profits in a short time period but it can also result in huge losses in a short time frame also. This is due in part to the usually risks that are involved in
trading as market forces operate and also due to the high number of fraudulent practices by those who are selling these kinds of stocks.
These days it is still possible to buy penny stocks and make a lot of money in the market. It is however necessary that you choose a broker wisely and employ your common sense. Remember that with big rewards there are also even bigger risks. You
should also never invest more than you can afford to lose.
Penny stocks are generally defined as stocks that trade on the OTC BB or Pink Sheets exchange. Some other regards this scheme as a common stock that trades for less than $5 a share and is traded over the counter (OTC) through
quotation services such as the OTC Bulletin Board or the Pink Sheets.
What Are Penny stocks?
In the UK markets, a penny stock, or penny shares commonly suggests to a stock and shares in small cap companies. These
companies with a market capitalization of less than £100 million and/or a share price of less than £1 with a put forward spread greater than 10%. Financial Services Authority (FSA) declares a standard regulatory risk warning about penny
shares to the public who take part.
Penny stock scam
It is very common that penny stocks are frequently persistently supported as part of dishonest pump and dump schemes. Some fraud companies adopts Pump and dump schemes. This scheme, involves use of false or misleading
statements to build up stocks, which are "dumped" on the public at exaggerated prices. Such schemes involve telemarketing and Internet fraud. There are other such schemes whose sole purpose is to cheat people. In the chop stocks scheme,
stocks are bought for pennies and sold for dollars to overseas or domestic retail investors. This leads to the high benefit for both brokers and stock promoters massive profits.
The payment of brokers usually is made "under the table" secret payoffs to put up for sale such stocks.The subject stocks usually have small or no liquidity earlier to the block purchase. After the block is
bought, the firm's partaking brokers will sell the stock to their brokerage customers at the then-current quoted ask price, to the often victimized investors who are generally unaware of this practice.
There are various ways to promote fake penny stocks that are employed by companies. The usual penny stock scam are postings about a stock from unknown, fake or misleading press releases issued by the company, spam e-mails and junk faxes that hype
absurd and fake claims, dishonest newsletter writers who support a stock for a fee, paid posters, or foreign buyersall in attempt to drive up the share price while the insiders sell.
Penny stocks are the stocks traded on the OTC BB or Pink Sheets exchange. There are also some other people who regards this scheme as a common stock that trades for less than $5 a share and is traded
over the counter (OTC) through quotation services such as the OTC Bulletin Board or the Pink Sheets.
What is a Penny stocks?
In the UK markets, a penny stock, or penny shares normally implies to a stock and shares in small cap companies. These companies with a market capitalization of
less than £100 million and/or a share price of less than £1 with offered spread greater than 10%. Financial Services Authority (FSA) declares a standard regulatory risk warning about penny shares to the public who take part.
Penny stock scam
Many companies employ various ways to promote fake penny stocks. The usual penny stock scam are postings about a stock from unknown, fake or misleading press releases issued by the
company, spam e-mails and junk faxes that advertise absurd and fake claims, dishonest newsletter writers who support a stock for a fee, paid posters, or foreign buyersall in attempt to drive up the share price while the insiders
sell.
Messages in chat rooms and bulletin board postings are often misleading. Unwitting investors buy the stock in droves, creating high demand and pumping up the price. But when the fraudsters
behind the scheme sell their shares at the high level and stop publicizing the stock, the price plummets, and investors lose their money. Fraudsters repeatedly use this ploy with small, thinly traded companies since it's easier to manipulate a stock
when there's little or no information available about the company.
The payment of brokers usually is made "under the table" secret payoffs to put up for sale such stocks.The subject stocks generally have small or no liquidity earlier to the block purchase. After the block is
purchased, the firm's partaking brokers will trade the stock to their brokerage customers at the then-current quoted ask price, to the often persecuted investors who are generally unaware of this practice.
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