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The Upside With Penny Stocks – What You Need To Understand
Making money with penny stocks is both rewarding and dodgy, as an investor you need to first understand the basics. The meaning of penny stocks, as specified in the Security and Exchange Commission (SEC), is any stock that is under $5. This definition isn't standard as some view them as stocks below $3. Typically these stocks are not traded on exchanges like (NYSE and NDX). They can be called as speculative stocks that are operated over- the-counter thru listing services like pink sheets and OTCBB. They may also be known as tiny caps, micro stocks or even nano caps.
Stakes Concerned When Investing With Penny Stocks
Stocks with a decent price are usually more volatile. For example a 1 cent stock can yield gains of roughly 100-300% in a single day. Higher priced stocks can be compared against the ordinary NYSE stocks which trade slowly and gradually. It is still feasible to make a gain of 20 to 50% daily with less volatile stocks. Typically, these stocks are operated in small volumes; however , earning profits with penny stocks is possible since they can rapidly shoot if they're singled out by investor experts.
One can make big gains from these stocks but they also are subject to crime and price management. In the month of November the Exchange Commission had to suspend 17 penny stocks due to lack of acceptable info and yet they were hyped up in varied bogs and websites. This is the flip side when it comes to this kind of stocks.
Methodology For Making Money With Penny Stocks
Making Money with penny stocks is simple if you have an entry and exit methodology. It is very important that you carefully look at the trading charts. It is advisable to buy stocks at their bid cost. The selling point relies upon an individual investor; one can sell at least 50 pc of the penny stocks when the shares reach a 30% PPS spike.
Considerations When Buying Penny Stocks
It is advisable for backers to find information from credible sources as they are a lot of stings and “pump and Dump” info in various sites and even journals. This microcap fraud principally comprises price inflations that are often made thru tricking statements. This is in an attempt to lure investors to buy the stocks terming them as lucrative.
As a speculator, there are a number of factors you ought to consider before jumping onto this bandwagon. You need to carefully analyze a company by looking into areas like verified statements, stock structure, transparency, turnover and all finance records. Credible firms should be noted on the SEC and this is a stockholders best chance on making Money with penny stocks.
Jared Brown is a pro in penny stocks. He's been, buying, trading, and selling penny stocks over his 10 year career. From his expereience, he has learned the best systems on the right way to research penny stocks.