The Secrets of Trading Penny Stocks

Penny stocks are common stocks that trade for less than five dollars. In reality, countless of them are traded for simple pennies as well as less for each share.

Many companies disapprove trading in shares that are underneath $5 in value. Consequently, this contributes to a lack of liquidity which adds to the volatility of those Stocks.

Generally, Penny Stocks aren’t traded on the conventional exchanges – NYSE, NASDAQ, or AMEX – also are not subject to the same regulatory or reporting stipulations as stocks traded on those exchanges.

Penny Stocks May Be Very Profitable However Equally Dangerous! Investing in penny shares can turn into a violent journey. It may be vastly worthwhile nevertheless it is as well immensely perilous. Also continual watchfulness is needed in order to keep away from succumbing to fraud. Trading Penny Stocks is not for the weak hearted.

However, it is imperative to observe a particular distinction to the declaration above. Countless sub five dollars dollar shares do trade on the regular exchanges and are bound to the austere regulatory and reporting stipulations of those exchanges as are all stocks traded on those exchanges.

In addition if a stock trades under $1 on the regular exchanges for too long, they run the risk of been de-listed from those exchanges and would have to re-list on the Over The Counter (OTC) Bulletin Board or the Pink Sheets.

Genuine Penny Stocks are traded through quotation services such as the Bulletin Board or the Pink Sheets (recognizable with a .PK suffix) .

The Appeal Of Penny Stocks To Many Investors

1. A little sum of cash could control a sizeable quantity of stocks
2. The cheap price as well as promise for swift growth
3. Because of the cheap penny shares prices, even minute moves can make for very large percent gains
4. Despite the fact that a number of Penny Stocks are thinly traded, others volume can get to many hundreds of millions of shares traded each day because of their cheap price.
5. In spite of the fact that there is an clear fascination for the potential of rapid and astronomical profit from trading penny stocks, there is a not so pretty side to reflect on.

A big number of stocks listed on the Pink Sheets or the OTCBB are manipulated and traded fraudulently, so Buyers Beware.

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