Penny stocks are low priced speculative stocks and these stocks are traded in over the counter ( OTC ) market. As per SEC ( The SEC Commission of US ) the maximum cost of the penny stocks is fixed at $5.0 per share and in tangible the cost of these stocks are far below and infrequently a mare one cent. Although the penny stocks are ordinarily traded in the over the counter market, however these may also be traded at NYSE or NASDAQ.
The proper way to begin trading penny stocks : though it’s a general belief that the penny stocks are dodgy but at the exact same time as the share costs are sometimes low, the chance linked with penny stocks is also minimum. Many individuals see making an investment in penny stocks as a chance to learn share-trading methodologies and simultaneously not all penny stocks are dangerous. Though the investment in penny stocks may not significantly enhance your monetary condition, but the chosen penny stocks may give you some profit.
If you made your mind to invest a touch of cash in penny stocks, you have got to approach a trader or dealer for getting started. As per SEC ( SEC Commission of US ) laws you’ve got to give a written request to the broker and after approval you will buy the stock from the broker. You need to consult the trader and should invest conscientiously. Your broker will tell you the rate of the stock and brokerage.
Before making an investment in penny stocks contact to the Stocks division of your state and get info about the broker. The history of broker provides vital info about the license and disciplinary actions taken against the broker.
Once you’ve decided to address a broker, get all of the info pertaining to the penny stocks, brokerage and other T&Cs in writing from the broker. You must also keep the records of all of the written documents provided to you by your broker. You need to ask your broker to give you the written documents discussing the recommendation for purchasing or selling of any penny stocks. You must also take an independent opinion of the penny stocks from another broker and decide judiciously before making any investment. Your broker should also give you an once per month statement discussing the penny stocks held by you in your account and the rates of the penny stocks.
SIPC Coverage : brokers dealing in penny stocks will often have SIPC ( Stocks Financier Protection Corporation ) coverage. If the broker isn’t able to pay you your dues due to insolvency, the SIPC guarantees the shopper owned penny stocks held by the brokers are paid. SIPC insures the whole purchaser owned stocks held by the agent, however in the event of fraud, the insurer isn’t responsible to pay the amount.
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