When it comes to stocks, penny stocks can be one of the most profitable and affordable ways to get involved. All financial trading comes with a bit of risk, but when you do the right research penny stocks can be a great investment for someone who isn’t starting with a lot of capital.
What are Penny Stocks?
Also known as pink sheet stocks, penny stocks are the shares of new start up companies. They trade in a range from $1 up to $5 and are typically sold in the over-the-counter (OTC) market. Penny stocks generally won’t be traded in the major exchanges, like the New York Stock Exchange (NYSE) or NASDAQ. However, on occasion, if they hold a certain value over time, you may find a few on one of those platforms.
Penny stocks are an affordable avenue to take when getting started in the stock market. They are great for beginners and experienced traders alike. With the proper research, these stocks can make you more than if you were to pick up stock with a larger company.
How Do I Buy Penny Stocks?
Buying penny stock can be done in numerous ways. You can find yourself a stockbroker, or follow the market and invest through a trading platform yourself. Penny stocks are typically traded on the OTCBB or through pink sheets.
Given the options, if you are going to buy penny stocks it’s best to trade through the OTCBB. They tend to be a safer place to buy stock compared to pink sheets. Pink sheets is just a quotation publisher; they don’t have any standard requirements to post a stock. On the other hand, the OTCBB is registered with the U.S. Securities and Exchange Commission (SEC), meaning they have standards that need to be met before a stock can be traded.
Are Penny Stocks Worth it?
If you do your research and invest wisely they certainly can be. They offer a great starting point and the ability to make a larger return on investment. The key to any and all financial trading is practice and recognizing patterns.
A great way to start is by paper trading. Paper trading is where you use a stock market simulator to practice trading without playing with your hard-earned money. Simulators run off of the real live market, and give you the chance to see if you are making the right decisions before you decided to actually invest.
Where can I Find the Best Penny Stocks?
There are many places to look when you are trying to find the best penny stock options. When it comes to learning the market, Raging Bull is a great site to learn the basics and beyond. They have the resources you need to learn how to become a great financial trader. They have tons of tips, tricks and insight to get you on the right path. You can check out their list of what they think are the best penny stocks, and get started investing today.