Guide: How to Invest in Penny Stocks

Guide: How to Invest in Penny Stocks

Article by Ryan Ashton

Ask any investor what a stock trading under $ 5 is and they will tell you it is a penny stock, microcap stock, or nano stock. These three terms are for the most part interchangeable. However the broader definition of a penny stock refers to a business’s aggregate value of its outstanding common shares, are more commonly known as its market capitalization rather than its stock price. However there is no set term that completely defines a penny stock.

You can leave those penny’s in your piggy bank collecting dust, or you can take them out and use them to invest in Penny Stocks. Penny Stocks are stocks that usually trade below $ 5 per share. Sometimes these stocks are sold for just a fraction of a cent. Here are some of the negatives: Penny Stocks are usually high risk stocks that are sold by smaller companies that are seeking money for expansion. These stocks tend to fluctuate greatly in price over time and have a rather low track record. On the positive side you can invest in a thousand Penny Stocks for just a few dollars. If this sounds like an exciting way to begin investing in the stock market, here are the steps to investing in Penny Stocks.


Things You’ll Need:

* Computer and internet.

* Information websites on Penny Stocks.

* Information websites on Penny Brokerage firms.

1. Step 1

Use your computer and the internet to research Penny Stocks and Penny Stock Brokerage firms extensively. The internet websites you search will show that Penny Stocks are not a sure bet by any means. Besides researching the stocks and firms online, look for any other information you can about Penny Stocks and Penny Stock Brokers. Do your homework!

2. Step 2

Make the best decision possible after you are sure you have all the necessary information for investing in Penny Stocks. Only buy your Penny Stocks from an experienced and proven brokerage firm. And if you are a new investor start ‘small’.

3. Step 3

Know your Securities and Exchange Commission (SEC) rules: 1. You must be approved for the transaction and be given a written agreement to the transaction by your firm.
2. The firm must furnish you with a document describing the risks of investing in penny stocks.
3. Your broker must give you the current market quotation for the penny stock as well as the compensation the firm and its broker will receive for the trade.
4. The firm must send monthly account statements showing the market value of each penny stock held in your account

4. Step 4

As you continue to learn and invest, Penny Stocks should add up to no more than 10% of your total investment portfolio. Penny Stocks are a very risky investment but if you are diligent, you may become one of a small group of investors who have experienced a tremendous profit. Research thoroughly, invest slowly and carefully and this could fatten your retirement nest egg.

Tips & Warnings

Research each investment opportunity thoroughly and ask questions about how the company operates.

Up to 70% of investors lose money on penny stocks.

Watch out for brokers who are only trying to sell and don’t have your best interest in mind.

Click Here! for information on how to invest in penny stocks and Turn $ 1,000 into
$ 1 Million

Ryan Ashton is a passionate investor who believes that achieving the biggest financial goal of your life will help you achieve several other personal goals. Dream big, act bigger and above all else… live to serve others.

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