If you look at the numbers on penny stocks, they may seem like an attractive investment opportunity. Each share is inexpensive so one can buy large amounts and if the stock goes up, good money can be made. However, it is not all smiles and big money and one should know more about this kind of trading before getting started.
The newbie that wants to know how to trade penny stocks should take the overall risk factor into serious consideration. These types of securities are not hard for anyone to manipulate, because they are so cheap. Just the slightest bit of negative or positive news can be enough to make a big difference in prices.
Low risk securities like ones from big corporations have many laws and rules governing them to protect the investor. Your penny stock picks will not have a great deal of protection from rules or regulations. They are not available from the big stock exchanges and you will need to get information from places like Pink Sheets or the OTCBB (Over-the-Counter Bulletin Board).
Pink Sheets is the name of the publication from the National Quotation Bureau and it lists a large variety of over-the-counter (OTC) securities. Over-the-counter simply means that a stock is not listed with a major exchange. The name "Pink Sheet" comes from the color of paper that the publication was originally printed on. Also, not all OTC securities are Pink Sheets. This kind of stock has very little regulation and companies are not required by law to file reports with the Securities Exchange Commission or SEC.
The OTCBB or Over-the-Counter Bulletin Board and Pink Sheets are separate entities. They are both quotation services yet the OTCBB is more stringent on its requirements and its companies provide regular reports to the SEC. Also, the OTCBB is run by NASDAQ. You can find a lot of helpful info at their website but only qualified brokers may buy and sell.
It is always best to research any penny stock investing opportunity completely before you buy. You can go to the SEC website to check out a company. You also may check out a company's ratings with the OTC Markets website. This service rates companies according to how much information they provide investors.
If you are looking into a company and can find almost no information, this is not a good sign. Unless a company releases periodic statements there is no way to accurately know the condition of their finances. Even companies that provide financial statements should be thoroughly investigated. Many people use stock resource sites that charge nominal fees.
Over-the-counter securities cannot be traded directly, as you must buy and sell through a broker. Full service and discount brokerage services are available. One of the most important things to remember is research. This will lessen you risk and increase your investment potential. If you decide to invest in penny stocks, you are taking significant risks. However, you will have the potential to make a lot of money if you are careful and knowledgeable.
The newbie that wants to know how to trade penny stocks should take the overall risk factor into serious consideration. These types of securities are not hard for anyone to manipulate, because they are so cheap. Just the slightest bit of negative or positive news can be enough to make a big difference in prices.
Low risk securities like ones from big corporations have many laws and rules governing them to protect the investor. Your penny stock picks will not have a great deal of protection from rules or regulations. They are not available from the big stock exchanges and you will need to get information from places like Pink Sheets or the OTCBB (Over-the-Counter Bulletin Board).
Pink Sheets is the name of the publication from the National Quotation Bureau and it lists a large variety of over-the-counter (OTC) securities. Over-the-counter simply means that a stock is not listed with a major exchange. The name "Pink Sheet" comes from the color of paper that the publication was originally printed on. Also, not all OTC securities are Pink Sheets. This kind of stock has very little regulation and companies are not required by law to file reports with the Securities Exchange Commission or SEC.
The OTCBB or Over-the-Counter Bulletin Board and Pink Sheets are separate entities. They are both quotation services yet the OTCBB is more stringent on its requirements and its companies provide regular reports to the SEC. Also, the OTCBB is run by NASDAQ. You can find a lot of helpful info at their website but only qualified brokers may buy and sell.
It is always best to research any penny stock investing opportunity completely before you buy. You can go to the SEC website to check out a company. You also may check out a company's ratings with the OTC Markets website. This service rates companies according to how much information they provide investors.
If you are looking into a company and can find almost no information, this is not a good sign. Unless a company releases periodic statements there is no way to accurately know the condition of their finances. Even companies that provide financial statements should be thoroughly investigated. Many people use stock resource sites that charge nominal fees.
Over-the-counter securities cannot be traded directly, as you must buy and sell through a broker. Full service and discount brokerage services are available. One of the most important things to remember is research. This will lessen you risk and increase your investment potential. If you decide to invest in penny stocks, you are taking significant risks. However, you will have the potential to make a lot of money if you are careful and knowledgeable.
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