Day Trading

Would you ride a roller coaster that you know very rarely gets inspected? How about one that’s NEVER been inspected? Some might want to take the ride because it’s a cheap ticket and they like the thrill!

My analogy refers to Penny Stocks traded on the pink sheet market. Penny stocks are cheap and some are not regulated or inspected at all. You feel good when you walk up to a roller coaster and you see an inspection sign posted, right? You know dangers still exists, but at least you have cut your risks down by knowing the ride get’s inspected. You know a policy and a procedure is in place that displays the safety and risks involved. So, you make a decision to get on a ride based on the information you’ve learned about it.

So what about penny stock rides? How do you know what regulations are in place for a penny stock? Is my penny stock inspected? How do you tell? It’s easy, they all have signs right in their symbol. Before investing or trading any penny stock, you want to know the risks and regulations that are behind it. You also want to know what kind of neighborhood it comes from. If you like the rough, tough and scary ‘hoods where there is very little police, then go with the suffix .PK symbols. The stock symbols are followed by .PK, which refers to the pink sheets. These penny stocks have very little to no regulation at all.

There are some that love these unregulated stocks. Why? Because the fact they are unregulated! They are open to manipulation by means of carrying a very low float. Buying a .PK stock is like waiting in line to get on the roller coaster and you can visually see the support structure is missing rivets and you say, “What’s the chances that support structure will fail when I’m up there”? “It’s a cheap ride and I want to take the risk”! You start riding that coaster up to the top, “oh crap the support structure is breaking”! You want out, but can’t! Or rather you can’t sell that stock because of liquidity issues! You painfully watch it get dumped and it all comes crumbling down. So, before you invest or trade, know what kind of ride you’re about to get on. Pay attention to the symbol suffix and know what risks you’re up against.

Don’t get me wrong, there are good .PK stock investments worth looking into, but at least you know what you’re starting out with. Next time you see a penny stock symbol, take notice of the suffix. One that offers a bit of regulation is the .OB, which trades on the OTCBB. However, all penny stocks are considered very risky and please consult with a professional before making any investment decision dealing with penny stocks. Its called doing your DD- “due diligence”. Penny stocks are considered speculation stocks.

Read more information about Penny Stocks at http://www.pennystocklist.com

Author: Gene Edwards
Article Source: EzineArticles.com
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