Stocks For Dummies
Penny Stocks for Dummies
For a novice penny stock trader, the internet can be a scary place to find information. I did a Google search on penny stocks for dummies and I was pretty disappointed with the results. Most of the top articles were irrelevant and the websites were all promotional in nature. I have never been keen on the “for dummies” movement, but it serves its purpose. After all, everyone has to start somewhere.
So without calling the novice penny stock trader a dummy, let’s cover a few basics. What is a penny stock and how is it different then other stocks? Technically it is a stock sold for under $5.00 per share and is traded over the counter. The stocks are traded outside of the major exchanges like NYSE and NASDAQ. There are minimal requirements for companies and therefore a lot more risk. However, there are many legitimate opportunities to invest in young companies which could potentially bloom into something profitable.
Now for the lowdown; penny stocks can be a high risk investment. There is a limited liquidity with penny stocks, they tend to have a lack of financial reporting and there is also a fair amount of fraud. So why would anyone want to invest in penny stocks?
There is the possibility that you could easily double or even quadruple your money over night. And some companies do become mid-cap stocks which become incredibly profitable. Penny stocks are commonly a starting place for amateur traders. It is a good way to get your feet wet so to speak. There are many experienced investors that include penny stocks in their portfolios too. Often time’s people who invest in penny stocks are on a mission to make money fast.
There are a lot of important facts to consider before investing in penny stocks. You have to watch out for fraud and scams, learn about reading charts and researching companies, and determine where you feel comfortable investing and when to sell.
By now you might be wondering if this is the right market for you. Most experienced traders will agree that penny stock trading is for someone with a high tolerance to risk. Even though many amateurs invest in penny stocks, it is advisable to do your homework before investing. Far too many people are tricked or manipulated into bad investments.
Closing food for thought, Ford, Playboy, and Xerox all started as penny stock companies, look at them now. With that in mind, do not let the naysayers get you down if you have your heart set on investing in penny stocks.
About the Author
Alicia Cramer writes informative content for a variety of clients; including Penny Stock Factory. For additional information about Penny Stock Factory and the valuable services they provide, visit: http://www.pennystockfactory.com.
Stock Investing For Dummies ( cd 1) part 3
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