penny stock regulation
are Penny Stocks worth getting into for a newb?
im completely new to the stock market but i plan on doing a butt load of research before getting into anything.i have hardly any money to invest maybe a few hundred so i thought penny stocks would be a good start but its hard to know for sure.
Getting into penny stocks as a newbie so that you can learn about investing/trading is a total waste of time and money. There is little or no research information about these stocks, they do not trade in a regulated market and the only vital information that is available to the general public is information published by promoters
When you invest/trade in penny stock you should never put up more than you can afford to loose and you should assume you will loose it all. Unlike regular securities, penny stocks usually do not let you use risk cutting procedures (options and/or stop orders) since most are not traded in a regulated market place. Since there no requirement on market makers in the OTC Market it may be difficult to find a buyer when selling is required.
They say when you buy securities you have a 50%-50% chance of making money, when you buy penny stocks you have a 50-50-90% chance, 50-50 chance of making money and a 90% chance of loosing money. Since there are no meaningful regulations for trading only those with trading experience stand a chance of being successful trading in penny stocks. Penny stocks are not for newbies.
When buying penny stocks, like any other security investment, you never invest 100% of you investing capital. Penny stocks are fun to trade, but you should never count on them to be considered part of your primary investment objectives. One should not trade penny stock unless they have several years experience trading regular securities.
All that said, here are some websites that you will find helpful
Hedge Funds: Investment Pools, Advisers, Trading Practices, Monitoring, Regulation (2006)