If you are new to investing you may be thinking about the benefits of penny stocks. It does not cost a lot of money to invest, as the shares are relatively cheap (hence the term "penny stock"). However, there are a lot of things to consider before you begin. Here are some helpful ideas to remember that can get you headed in the right direction.
The first step in learning how to trade penny stocks is understanding the risks. Compared to shares from large corporations, it is not difficult to manipulate the price of a cheap stock. Traders buy and sell based on good or bad news about a particular stock and almost anyone can cause a stir with a small investment.
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 refers to the National Quotation Bureau publication for over-the-counter or OTC trading. Over-the-counter is another name for "unlisted". At one time, this publication was printed on pink paper, and that is how it got its name. In fact, many people think that "over-the-counter" and "Pink Sheets" are the same thing, but they are not synonymous. A stock traded in this manner does not meet stock exchange qualifications and the company does not need to file with the Security Exchange Commission (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.
Before you begin any type of penny stock investing make sure you do your homework first. The SEC runs a website that you can use to check up on companies. Another service to consider is called OTC Markets. Their website has information and rates companies on how much or how little financial details they release to investors.
When you research companies and find nothing, you should avoid investing in them. This venture is risky enough without adding more to it. Look for companies that release regular financial statements and take the time to study them well. If you want additional info, you may wish to check out one of many stock research sites that charge small fees.
When you buy or sell an OTC stock it must be done through a brokerage that deals in them. You can use a full service or discount broker. To get the most from your investment dollars and to minimize risks, check out each company as much as possible beforehand. Penny stocks can bring great rewards, but you take your chances.
The first step in learning how to trade penny stocks is understanding the risks. Compared to shares from large corporations, it is not difficult to manipulate the price of a cheap stock. Traders buy and sell based on good or bad news about a particular stock and almost anyone can cause a stir with a small investment.
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 refers to the National Quotation Bureau publication for over-the-counter or OTC trading. Over-the-counter is another name for "unlisted". At one time, this publication was printed on pink paper, and that is how it got its name. In fact, many people think that "over-the-counter" and "Pink Sheets" are the same thing, but they are not synonymous. A stock traded in this manner does not meet stock exchange qualifications and the company does not need to file with the Security Exchange Commission (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.
Before you begin any type of penny stock investing make sure you do your homework first. The SEC runs a website that you can use to check up on companies. Another service to consider is called OTC Markets. Their website has information and rates companies on how much or how little financial details they release to investors.
When you research companies and find nothing, you should avoid investing in them. This venture is risky enough without adding more to it. Look for companies that release regular financial statements and take the time to study them well. If you want additional info, you may wish to check out one of many stock research sites that charge small fees.
When you buy or sell an OTC stock it must be done through a brokerage that deals in them. You can use a full service or discount broker. To get the most from your investment dollars and to minimize risks, check out each company as much as possible beforehand. Penny stocks can bring great rewards, but you take your chances.
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