Penny Stocks - Risky Investment Or High Payoff, You be The Judge
Penny stocks are stocks that normally hold a face value of less than $5. Many small companies offer these low-priced stocks to be traded on the Over-The-Counter-Bulletin-Board (OTCBB) and the Pink Sheets. This is mainly because neither the OTCBB nor the Pink Sheets require the same minimum requirements as the NASDAQ or the New York Stock Exchange (NYSE), set by the Securities and Exchange Commission. Businesses that are new or close to bankruptcy may issue penny stocks as a quick and easy way for these businesses to create quick capital and try to save the business from having to file bankruptcy in a court. As you can imagine all of the aforementioned factors- low price, lack of stability and lack of standards- make penny stocks one of the most risky investments for anyone that is interested in playing or trading on the stock market. The fact is most penny stocks do actually end up in bankruptcy, but the lure of the great payoff if a company does succeed, is enough for many people to pursue the buying and selling of penny stocks. There are many other reasons why penny stocks are risky and it includes: Low or poor liquidity: Since penny stocks are not traded very frequently, there may be difficulty finding a buyer. To interest someone in buying these stocks, the price may have to be priced substantially lowered. Little or incomplete information about the company: Most of the companies that issue penny stocks do not have enough reportable history to learn a significant amount about them for those investors interested in doing research prior to investing their money. This is also due to the fact that the OTCBB and the Pink Sheets do not have to issue financial statements. Potential for fraud: Penny stocks are often sold through spam email or off-shore brokers by con artists due in large part to the lack of regulation that penny stocks are not forced to abide by or suffer from. Although some penny stocks are fraudulent and others are companies facing bankruptcies, this is not true in every case. Quite possibly some of the businesses will one day be listed on the NASDAQ or NYSE, but are currently struggling to meet the requirements. The opportunity to start with these companies from the very beginning can pay off in the end, given the growth potential. If you are able to get in on the ground floor with a company that does find success, you could ride all the way to the top. It can be difficult determining which of these stocks has the potential for growth. The easiest way to become a victim of fraud is to do little, or even worse, no research. Obtaining this information can be time consuming and difficult, unless you have a very good knowledge of what it is that you are seeking. There are some companies that claim to have “inside information” about companies that issue penny stocks, but there is the possibility that this is a front in order to push a particular stock on an unsuspecting investor. As an investor, you can either do research or take your chances. The fact that the stocks are very low in price means that if you do buy them, the chance that you lose a lot of money is small. If you are willing to take a loss and understand that the company could go under, they can be a fun and very interesting addition to your portfolio. It is important to remember that your odds are not very good. Most penny stocks will end up in a total loss. It can be difficult to find a broker that will buy penny stocks. This is due in part to the difficulties in tracking them. There are some online brokers that specialize in penny stocks. Brokers are required by regulations to obtain written confirmation from the client regarding the transaction. In addition, the broker is required to give the client a document that outlines risks when it comes to speculating with penny stocks. Lastly, the broker must inform the buyer the amount of compensation that the firm will receive for the trade and the current market price of the stock. The client will receive monthly statements, which detail the market value of each penny stock that has been purchased. As you can see penny stock s are an extremely risky investment but there are some instances where the rewards actually outweigh the risk associated with investing in an unknown company. The key is to actually find the right one. Timothy Gorman is a successful Webmaster and publisher of Online Stock Trading Secrets. He provides more stock advice, information and ways to make money with penny stocks that you can research in your pajamas on his website. |
Other Online Trading Articles
How To Really Start Making Money With FOREX Trading If you've been checking out ways to get started in investing, chances are you've heard about the foreign exchange market, or FOREX trading. If you're unfamiliar with this type of trading, it can all seem a bit too hard, but in fact the hardest part is getting started. Keep reading to find out the basics of FOREX trading and what you need to do ...Trading Plan: A Roadmap To Trading The Markets Having a trading plan is similar to having a map when traveling to a new location. Modern day vehicles often come with a navigation system making it easier to travel with the fastest route. A trading plan acts as a road map for the trading day.Most new traders trade without a plan. This often causes reckless trading, emotional trading, an ...Forex for Absolute Dummies Forex (foreign exchange) pertains to the foreign currency exchange market, the world’s largest financial trading market. It exceeds the trading volume of the equities market a hundred fold.Want to pass yourself as a forex expert? Know these buzz words:• Bid – to buy• Ask – to sell• Liquidity – financial ease of transa ...Crude Oil & Unleaded Gas Update - Is Another Big Profitable Move Coming? If you read Monday’s article you will have seen we were bullish crude oil and unleaded gasoline based upon geo political concerns and are looking for a big move up to test contract highs.We did not get any strength on Monday, but prices have bottomed today and are moving higher. Could this see another test of the highs or will the bears t ...Dollar Cost Averaging Dollar cost averaging is one of the most popular ideas in the investment community. Everyone seems to like it and it has become a watchword among stock and mutual fund brokers. If it is properly done you will make money, if not you will lose money or at best stay even. Let's examine the basic premise behind this method of investing.You de ...Online Discount Stock Brokers Discount stock brokers are the most common type of brokers but there are other brokers like full service brokers and money managers.Just about thirty years ago there were only full service stock brokers, offering order execution and investment advice at extremely high costs. Then the first discount brokers came in with low fees just for t ...An Introduction To Forex Trading Foreign Exchange Trading, commonly known as FOREX, is the trading of different currencies in the world. FOREX is not a new concept. Since the dawn of man, people used exchanging of currencies for transactions, but not necessarily in the form that we are currently familiar with.When man started practicing early forms of ‘business,’ they le ...How Mutual Funds Work Mutual funds are good options for American investors to meet their financial goals. These funds offer professional management and diversification of the funds invested. Mutual funds assets in 1990-2000 rose from 1.065 trillion to a whooping 6.965 trillion dollars. 10% Americans owned funds in 1980 and by 2000, the percentage increased to 49%. ...Hedge Trading On The Forex Currency Market Trading on the forex currency market can be a volatile yet exciting form of investment and certainly has the potential of bringing vast rewards if done so properly.However it should be accepted that forex currency trading could also be a very risky investment as the market can swing both in an upward and downward movement in a split secon ...A Look at Forex Market Makers The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment’s notice. Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.Whenever a pair of currencies is bought or sold, there must be someone at the other end of the trans ...Traders Are Flocking To The Forex The forex, or Foreign Currency Exchange is vast and growing everyday. The forex market is larger than all other markets combined. Literally trillions of dollars are traded daily on the exchange.The forex does not have an actual trading floor. It is made up of a network of banks, they use telecommunication systems, including the internet t ...Overvalued & Underbought With all the bad news that has been dumped upon the economy for some reason the stock market is going up. Why?The SEC (Securities and Exchange Commission) has just set up new guidelines for core earnings. No more proforma computations. You know what proforma means - the company CEO or Treasurer waves his magic wand and says this is what I ...E-gold Invest: Make Money With Currency Trading Many people are already starting to pay attention to the newest online trend: E-gold investing.E-gold investing is a all about a system that allows you to profit from the money that is being traded everyday on the internet. What you're doing when you are trading e-gold (or e-currencies) is that you are providing the backup for internet mo ...Internet Footprints - Leaving Your (Brand) Name on the Web - Really a Benefit? It’s a morning ritual, where a few people are walking or running down the beach, the bulldozers are cleansing the sand, erasing all trials of the previous day. Cleansing your internet prints is hardly possible, after a day of surfing they are all over the web world and there is no way to erase them.Some companies leave their print, some o ...Is The FOREX The Market To Trade Your Way to Riches? Ever watch the news and see the ending FOREX trades of the currency markets? They're usually based on how individual currencies traded against the dollar. FOREX is the abbreviation for the Foreign Exchange market. FOREX is a market where the value of individual currencies from all over the world are traded. The currency market today began in ...An Introduction To Forex Trading Forex Trading, also known as FX Trading or Foreign Exchange Trading, is what happens when you trade one nation's currency for another. For example, if I go to the bank and exchange ten United States dollars for 15 Australian dollars, I have completed a simple Forex trade.The forex trading market is the largest trading market in the world. ...Is Your Garage Full Of Junk? I have a 2-car garage. There are nice shelves on one side and a good practical workbench with a vice on the other side. Plenty of room for 2 cars yet I have to be careful when I pull in so I won't run over stuff stacked on each side. Sound familiar?Kinda reminds me of the investment portfolio of many people. Full of junk. If I threw out ...Internet and Computer Systems in the FOREX Business With every passing year the interest in electronic trading is bigger, more especially trading shares and currency through Internet. A new profession came forward – this of the currency dealer. The appearance of this profession was caused by the full force of development of Internet, which enabled the exchange business to be carried over at home ...Precious Metals Market The promise that precious metals have in the trade market may be traced back to their many uses and their status throughout history. Precious metals, specifically gold and silver, were once used as currency in a lot of developed civilizations. Their value is now carried over to the recent times and although they are no longer used as currency, ...Online Futures Trading If one were to look at the history of selling and buying of commodities, then you would see that the idea of trading in futures has been pretty much going on since the concept of trading in goods and produce in agricultural goods began. Farmers would get advance payment on their crops or cattle produce from merchants on the guarantee of delivery ...E-currency Exchange Home Business If you are reading this article you are probably one of the many people who have spent countless hours searching for unique ways to make money on the internet. Very few people have gone on to succeed and most have failed miserably time and time again.So how are some people succeeding? The answer is quite simple; they are finding a busin ...Invest, Be Wrong, and Make Money in the Stock Market I have been trading for several decades and was an exchange member and floor trader for 17 years. You learn fast there or you go broke in a hurry. As you can see I managed to hold my own for a few years until I found the secret and started to become a successful trader. Every professional trader I know knows the one great secret and that is to k ...Futures Trading Software Futures trading software plays an important role in the economics of speculation. Speculation brings about a gradual adjustment of prices to the contingencies foreseen by the speculator. If a speculator foresees that the market situation after six months will warrant a rise in prices, he begins to make purchases with the objective of selling the ...The ABC's To Getting Started With Stocks Many years ago stock trading was reserved for the very wealthy or for those individuals that had the right connections. However, with the explosion of the Internet and the ability to easily trade stocks online it has become more common for anyone with money and a desire to trade to buy and sell stocks of almost any company. Perhaps the only st ...A Guide to Currency Trading Though it may seem a bit strange at first, there is money to be made in the trading of money. Individuals who carefully monitor the exchange rates of different currencies can use currency trading as a source of income akin to stocks and bonds… converting their money from one currency to another, waiting for the exchange rate to shift, and then c ...The Money Management Question: How Much Can I Lose? Disciplined money management makes the difference between success and failure in investing. When considering an investment, too many people ask, "How much can I make?" That's the wrong question. The right question is "How much can I lose?"Let's take the stock market for example (although proper money management applies to all investments) ...New to Investing? Simple Guidelines for Success A financial advisor and friend once told me, “It doesn’t matter how good of job someone has, if they want to acquire wealth in this life, at some point they are going to have to invest in something.” Investing is something most people will do during their lifetime. They may invest in real estate, life insurance, stocks, bonds, mutual funds or a ...Stocks Or Foreign Exchange - Which One? Many people would like to invest in stocks or Forex but are not really sure of the difference between the two and don’t know which is the right choice for them. There is little doubt that there are many options out there for you. But, it is hard to say which the right choice is until you gather some information about them and then make the righ ...Advantages of Floor Traders - and How to Get Them Traders who make their living on the floor of an exchange have some things that I think are advantages. You see floor traders can draw from their senses. What I mean by this is they can use sight, sound, and speech. These are advantages that they add to their arsenal when trading. The pit on a trading floor looks very chaotic but there is a simp ...Passive Income Online From e-Currency Exchange Building passive income is something that everyone wishes they could do, some people will spend countless hours and thousands of dollars searching for that one passive income opportunity.Sadly most people never find it. In the end they get know where fast, and think everyone and everything is out to get them and their money. Well t ...
|
