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While penny stocks are gaining more acceptance among traditional investors, Wall Street, federal regulators, and many brokers and analysts think these stocks are still too risky and too unregulated to be a sound investment. Penny stock investors, however, tout the stock’s versatility as a relatively inexpensive way for small investors to raise some quick cash. If you’re not a seasoned investor, you may be wondering exactly what penny stocks are. Penny stocks are the “street” name for microcap stocks. Microcap stocks are stocks issued by companies for less than $5.00 a share. Companies trading penny stock may have some challenges surrounding debt, liquidity and profits. Many of these companies were once listed on one of the major stock exchanges, like the New York Stock Exchange or the NASDQ, but have been delisted. Other companies are using their penny stock offerings to monitor investor interest in anticipation of a listing on one of the major exchanges or to raise some much needed startup capital. Some penny stocks are traded on the NASDQ. These stocks may have been listed on the exchange at one time, but have been delisted. The NASDQ, with its focus on technology and startup companies, tends to look more favorably on microcap stocks than other exchanges. Other stocks are traded Over The Counter-Bulletin Board (OTC-BB), electronically through over the phone and on-line trading. You can also invest in penny stocks using the pink sheet service, which is a quotation service providing investors with information about stocks registered with it. Pink Sheet stocks do not have to file with the Securities and Exchange Commission (SEC), which makes them a little riskier and subject to potential frauds and scams. Most penny stock investors do not use a broker, but rather buy and sell using an online trading platform. Any online trading platform will work. These websites and platform offer a wide variety of customer service and technical support. While these sites re significantly less expensive than a full service brokerage firm, you will stay be charged fees for associated maintenance, transfers, or trades. These vary by platform, so do some research before you enroll and open an account. There are a number of online resources, including the listings on your online trading platform, which provide a list of penny stocks, as well as daily trading activities for those stocks. These sites may also provide limited research. Investing in the stock market is risky. While the stock market has produced higher lifetime averages than traditional savings accounts or investment in bonds and mutual funds, it also has the potential for larger losses. Penny stocks are not as regulated by the Securities and Exchange Commission as more traditional stocks. Unless they are listing on the NASDQ micro-cap board, most companies are not subjected to the same regulations, which may increases the risk of fraud and stock price manipulation. The bottom line, however, is that investing is risky. Investors choosing to explore the penny stock market may be susceptible to more risk than other investors, but they tend to have a higher tolerance for risk and a bigger expectation for larger rewards. Are you looking for more information regarding penny stock trading? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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