| 1 comments ]

Penny stocks are business share offerings available to the public by businesses that are too new or small to have a listing with the dominant stock exchanges. These offer high return possibilities, and the initial investment can be very small, however you also stand the risk of the business becoming insolvent and you losing your money invested. The pull to these kinds of shares because of the fact that even though they face risks there can be huge payoffs.

Selecting penny stocks correctly means that you should have an independent appraisal of the organization's business model. Just like purchasing other stocks, you need to understand the sort of business they are operating and what company plans they anticipate for the future.
It is rare that the businesses that issue these kinds of stocks have complicated organizations - usually they are simple to understand and delve into. A typical type of penny stock is a mining organization that benefits when the price of the resource it extracts goes above a specific price. There are some oil extraction stocks that are valued in the same way.

Penny stocks are thought of as a high risk investment, according to the many bankers. The risks you might have with these stocks include inadequate reporting of financial information, low trading volume and even fraud.

Keep in mind that the accounting reporting regulations for penny shares aren't typically as regulated as stocks on national exchanges. In the investment type known as the Pink Sheets, there's virtually no regulatory requirements on penny stocks, no set accounting guidelines or reporting guidelines.

Since there's low or even no regulation or standards, this renders this sort of share susceptible to fraud and dishonest trading. A common schemes is know as a "pump and dump" - this refers to investors manipulating the price of stocks to skyrocket and then dump all of their stocks at once leaving other investors with big losses.

Now, that doesn't necessarily mean you should be scared off of these stocks entirely. There are lots of real, sound small organizations, and they have tons of potential. Tons of organizations that are classified as penny stocks are going to be successful in the oncoming future. If you are someone who can choose one of these organizations, your profits on your purchase of shares could be huge.

Remember that picking out the right penny share will have a big return for you.. You may end up losing money on many picks, yet when you spot a winning stock it will provide such a large profit that the losing transactions won't matter.

Article Source

1 comments

Anonymous said... @ December 6, 2012 at 2:35 AM

Thanks for great information you write it very clean.I am very lucky to get this tips from you.Trade penny stocks online

Post a Comment

Stocks, Stock, stock market, stock quote, penny stock, stock markets, stock quotes, stock prices, stock price, stock trading, stock report, stock investment, buy stock, trade stock, stock shares, stock investments, stock ticker, stock picks, stock index, stock information, stock data, stock lesson, stock volume, stock earning, stock investor, stock indices, stock news, stock performance, stock dividend, stock exchange, stock market quote