Penny stocks- an introduction : if you’re completely aware about penny stocks and need to spend some cash in penny stocks, you may be interested to find out ways to pick penny stocks. You’ll find an inventory of many stocks being traded at the site of pink sheets and will definitely be interested to take a position in some of the future Microsoft or Wal-Mart. This could occur only if the financier picks a right penny stock otherwise he may lose the amount.
Limited info for penny stocks : It is actually terribly hard to find info on penny stocks, as there are reliable sources with us. Firstly the data supplied by the company won’t be the right one and suspect if the info provided is correct, it might not be applicable.
For penny stocks we aren’t positive how to find info about the companies offering penny stocks. These firms have to offer a little information to SEC Commission ( SEC ) and get simply listed at pink sheets. These corporations therefore are not controlled by SEC, as is the case with corporations listed at Naz or NYSE. Similarly the history of the corporations listed at penny stocks isn’t available. The firms could be broke or new having no experience of business and therefore can be highly dangerous. A new financier should thus carry out the study about the firms before putting their hard-earned money into the market.
The following limitation on penny stocks is the limited liquidity. Infrequently it is tough to sell the stock, as you may not find the purchaser for it. Having extremely low liquidity, you’ll have to sell the stock at serious discount causing you a heavy loss. Infrequently the brokers manipulate the penny stocks in varied ways and may lead to you sever loss so till and unless you don’t understand the underlying principles of market avoid investing big amount in penny stocks.
Probabilities of crime : As the corporations offering penny stocks aren’t reviewed or controlled by central agencies or The SEC Commission ( SEC ), penny stocks are more inclined to crime. The majority of the times the firms spread rumours about their fiscal performance and other related issues and mislead the stockholders. Many times these firms take assistance from media like papers, radio or e-mail and hype about the penny stocks offered by them. You will get one or two mails ( spam ) from their agents also. These firms also pay for some monetary consult for commending their penny stocks to the stockholders.
Selecting the right penny stock : though the market of penny stock is highly dangerous, there are good corporations also at OTCBB and pink sheets. The particular understanding is wanted to identify the good penny stock and plenty of research is required before putting money in penny stocks.