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The term "penny stock" refers to a type of stock that generally trades below $5.00 a share. Also known as micro-cap trading, penny stocks are not traded on any of the major markets, like the New York Stock Exchange or the NASDQ, they are traded "over the counter" using what investors call pink sheets. Companies that offer penny stocks tend to me smaller, more volatile, and are subjected to less comprehensive filing and listing regulations. All these factors make investing in penny stocks a high risk proposition for the investor. While there seems to be a lot of mystery and intrigue around investing with penny stocks, there are a number of online brokerages and websites that can help you identify and invest these companies. Many of these websites offer daily updates, identifying their "hot picks" for you. These websites may also offer a plethora of research and testimonials about the company and the stock. Be sure to pay close attention to author's disclosure, so you know whether he or she has a vested interest in hyping or promoting the stock of a particular company. In addition to using the research provided by these websites, you may want to do some of your own research. When selecting penny stocks, make sure you have a good idea of the company’s business models and overall financial health. The value of penny stock can be swayed by a flurry of activity, so you need to be vigilant about when you plan to buy or sell. Many of these websites offer access to investor chat rooms and discussion forums. In these arenas you can hear firsthand from investors about their experience with a particular company, ask questions about specific stocks and keep an eye on any buying or selling trends. These chat rooms and discussion forums tend to promote successful investors, so weigh their advice and story against your own research before making a decision. The penny stock market is volatile and risky. Investors need to make buying and selling decisions quickly, as the sticks are prone to big gains and losses on a daily, sometimes, hourly basis. Investors who chose the penny stock market must make quick decisions, so having the most up to date research and tips is important. Knowing what stocks are "hot" at given in time can help you save both time and money in the long run. Unlike investors in traditional stocks, bonds, and mutual funds, penny stock investors are not in it for the long haul. Without a long term investment strategy, penny stock traders need to move quickly so their losses will not accumulate. For investors looking for a high risk- high reward challenge, penny stocks are an ideal option. Investors willing to spend some time researching companies, pay attention to "hot tips" from successful investors, and trust their own intuition abut a stock and a company, penny stocks offer big gains for a small initial investment. As always, the goal is to buy low and sell high! Are you looking for more information regarding investing in penny stocks? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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