A look into Penny Stocks

“Wall Street people learn nothing and forget everything” ~Benjamin Graham

A Guest Post by Robert Sommers

Many investors are very skeptical when it comes to investing in the penny stocks market. This skepticism is somewhat understandable as they are generally very high risk investments. While the appeal of penny stock- low price and high returns- attracts investors, the lack of detailed information on penny stock companies, minimal regulatory and listing requirements, and the historical manipulation of the market scares away just as many, if not more.

However, it is important to remember that the issue of fraud is not true for all low-priced stocks traded on the OTC market. While many investors have lost a lot of amount of money in penny stocks, many have won big as well. Penny stocks may not be as sure of a bet as brokerage firms would have you believe, but by performing due diligence and possessing a keen eye for good companies, it is possible to make money in the market.

What is a Penny StockA penny stock is a stock that trades for less than $1 a share and is available over the counter either through the Pink Sheets or OTC Bulletin Board. Most penny stock companies typically only have a few million dollars in assets and a very short operating history. Because of these things, many people believe penny stocks are under-performing companies and have a low price tag as a result- though this is not often the case.Penny stocks are the ideal vehicle for day traders looking to buy and sell stocks in the short term with the expectation of making a quick profit. Day trading stock is a strategy that involves buying and selling stock during a trading session with profit or loss being made on the price fluctuations that occur throughout the day. Day trading penny stocks is a good start for fledgling investors looking to get a handle of the OTC market and its inner workings.The real hurdle concerning penny stocks is identifying opportunities that other investors have failed to capitalize on. Any success achieved with penny stocks is accomplished through finding current and reliable information concerning the stock or market segment in question. Considering the small size of most penny stock companies, finding an angle that hasn’t been previously utilized is very possible and a profitable penny stock investor both utilizes patience and performs due diligence in order to achieve success.

Robert Sommers is a freelance mortgage and real estate writer and an amateur invested based in Baltimore. He has worked for over 25 years as a licensed real estate agent in all areas of commercial and residential real estate.

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