Buying Penny Stocks

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One of the most popular investments is the stock market. There is no doubt that most people think of the stock market when they hear the word “investment”. Although there are plenty of investors who become really successful and wealthy with stock investing, we still could not deny the fact that the stock market is very risky. In fact, this investment is very fickle and unstable. This is the reason why stock investors need to have plenty of courage – and they must also be knowledgeable enough to know how to handle certain risks when they arise. But even though the stock market is very risky and dangerous, there are still successful investors who choose to invest inĀ cheap stocks, or also known as penny stocks.

Penny stocks are stocks under 5 dollars per share. They are traded at a very low price, and so most investors find it easier to own plenty of penny stock shares even with a small amount of capital. However, cheap penny stocks are actually stocks that are owned by companies which are just new with the business and are in need of capital. Thus, there is no actual basis on the potentiality of the business to grow and be successful. As a matter of fact, penny stock investors are more likely to incur losses than gain profits. In general, buying penny stocks is really dangerous, and this is not something for those investors with faint hearts.

Buy Penny Stocks

After thorough understanding of what penny stocks are, and what are the risks involved with such, the next thing that you have to find out is where to buy penny stocks. Unlike the regular-priced stocks, penny stocks are not actually traded in major stock markets. In fact, penny stocks are listed in pink sheets or over-the-counter markets. The stocks that are listed in pink sheets are riskier because they are not required to file their financial statements with the Securities and Exchange Commission (SEC).

If you are wondering how to buy penny stocks, you need to hire a penny stock broker to process the trading transactions. There are two major types of penny stock brokers to choose from, and these are the full service brokers and online discount brokers.

Penny Stock Brokers

A full service broker is most ideal for those first time investors who are not confident with their investing skills and do not know how to choose the best stocks to buy. The best thing about a full service broker is that they offer investing advice, and they also make suggestions on which stocks are best to invest with. However, they are more expensive when it comes to commissions and service fees.

On the other hand, online brokers are the cheaper option for a broker, and they are recommended for those investors who have an experience with penny stock investing. Discount brokers do not typically give advice about investments; thus, investors must know how to find out which the hottest penny stocks available for sale.

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