A bit of a higher risk, but a much better return. Penny stocks can be a really good option if you are considering getting into the stock market, and even if you’re already playing the game. The important thing is to do your research. Here is some info on what penny stocks are, and where to find the best penny stocks.
What are Penny Stocks?
Penny stocks are inexpensive stocks for start-up companies. While they are called penny stocks, these stocks trade from $1 up to $5. Penny stocks can be a bigger risk because it’s hard to predict what a new company is going to do in the future. All the while, they can be a very profitable venture if you make the right decisions.
Penny stocks rarely make it to the big market reports like the New York Stock Exchange (NYSE). They are smaller stocks and they get posted in the Pink Slips or the over-the-counter (OTC) market. These two platforms are where all penny stocks are traded.
Where Can You Buy Penny Stock?
You can get into the penny stock market by getting started on your own, or you can find a stockbroker. Penny stocks are traded on Pink Sheet listings and on the OTCBB. Every now and then when a penny stock holds its value, it may show up on the bigger platforms like NASDAQ or the NYSE.
When it comes to buying penny stocks, it is crucial that you do plenty of research. Penny stocks trades are handled differently in comparison to the larger company stock trades. If you are looking at Pink Sheets, they only publish quotations. This means that when buying through Pink Sheets, there are no standards set to protect you from a bad investment. The OTCBB, however, is registered under the U.S. Securities and Exchange Commission (SEC). They have standards set in place and will offer you a bit more protection when it comes to your investments.
Are Penny Stocks Worth the Investment?
They certainly can be. Penny stocks have the benefit of being cheap. This means if you research a new company and feel they are going to increase in value, you can get more shares for your money. When the company’s shares go up in value, your return will be significant in comparison to buying less stock in a larger, more established company.
If you are still unsure if it’s a wise move for you to get into penny stocks, you can always try paper trading. Paper trading is trading in the real world market without using real money. You can find a stock market simulator to practice on.
Finding the Best Penny Stocks
The big take away here is to do research before jumping in. That is how you find the best penny stocks. A great site set up for researching all forms of financial trading is Raging Bull. They have insider tips and tricks ready for you to help you start trading today.