Penny Stock Basics

Penny stocks are shares in companies whose total worth are less than about $5 million and so are not considered big enough to be listed on the main stock markets like the NYSE or the NASDAQ but, they do fluctuate in value just like the shares of companies that are on the main stock market lists. This means that there is an opportunity for investors to make money only investing in penny stocks, which many people do. As these companies not on the main stock market lists are small, their stock values are also small, ranging from just a few cents to perhaps $5 but rarely anything much more. As these shares are so cheap to buy, an investor can start investing on penny stocks without having a lot of capital, perhaps only $50. As these small companies are not listed on the main stock markets, they do not come under the rules of the Securities and Exchange Commission (SEC). As they are not under SEC regulations, they do not have to comply with the SEC ruling that any company trading or selling its shares, must provide potential investors with at least a certain amount of information about the company. This basically means that penny stock investors are often investing without even knowing anything about the company they are investing in. Trading in penny stocks has therefore been considered as gambling as an investor knows nothing about where they have invested their money. This could account for the fact that 90% of penny stock investors lose their investments whilst only 10% of them make a profit. It is possible to make money on penny stocks though, as can be seen by the fact that there are several penny stock millionaires and is possible that there may soon be more however, they are the exception , not the rule, even for the 10% that do profit from penny stock investments. You can learn more about investing in penny stocks at however, if you are considering starting to invest in penny stocks, perhaps your best way to start is to make the investments via a professional stock broker as most of them will trade penny stocks on your behalf. Some people opt to use penny trading as a way to learn about trading before starting to trade on the larger, more expensive stock markets and this may be a good idea however, considering that 90% of penny stock investors lose their money, if you opt to do this, you should be prepared to lose any investment in penny stocks that you do make. Even today’s largest corporations started somewhere though and many of them may even have started by selling their shares for pennies as penny stocks and any one that does invest in penny stocks must be hoping that they buy shares in the next small company to become a huge multi-national corporation as any shares they own now will become worth plenty if that does happen.