How To Invest In Penny Stocks

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• Penny stocks are often dismissed as excessively
  risky investments that seldom pay off. It should
  be admitted that there is a lot of truth to
  thisbut with the right knowledge and tactics,
  its possible to make a substantial amount of
  money in penny stocks. Having said that, lets
  take a look at penny stockswhat they are, their
  associated pros and cons, and how to go about
  investing in them.

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• Basically, a penny stock is one that sells at a
  low price. Despite the name, these stocks usually
  cost more than a pennythey occupy a range of
  prices. Some cost 1, others cost a fraction of a
  penny.
• The Securities Exchange Commission (SEC)
  classifies a stock in this category if is it
  priced at 5 or less.1 Penny stocks are sometimes
  called micro-cap stocks.

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• An over-the-counter stock is one that isnt
  listed on the formal exchanges (e.g., the NYSE).
  Penny stocks often fall into this category, but
  many do not.
• Over-the-counter stocks are widely considered
  risky because they arent subject to the listing
  and reporting requirements of the major exchanges.

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• Some penny stocks can be found on NASDAQ or other
  stock exchanges, but a great many are not listed
  there. A lot of penny stocks are on the pink
  sheetsdaily publications of over-the-counter
  securities.
• You can also find them on the Over-the-Counter
  Bulletin Board (OTCBB). Securities on the OTCBB
  need not meet the listing requirements of the
  NYSE or other exchanges, but they must file
  financial statements with an appropriate
  regulator (e.g., the SEC).

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• Inexpensive Their low price makes these stocks
  attractive to investors who may not have the
  funding to purchase relatively expensive shares
  from large companies.
• Huge profit potential This benefit follows from
  the first. Because these stocks are so cheap, a
  slight increase in value can be profitable.

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• As theyre listed on the pink sheets, penny
  stocks need not follow SEC filing requirements.
  Therefore, investors may have trouble finding an
  adequate amount of information about them.
  Additionally, these kinds of stocks tend to be
  quite new, with little or no track record that
  investors can consult.

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• Penny stocks are associated with poor liquidity
  and an attendant lack of market activity. This
  means that a trader is more likely to get stuck
  with a stock they cant sell.
• Lack of liquidity makes penny stocks vulnerable
  to price manipulation. A trader can easily buy
  large numbers of shares and temporarily drive up
  the price to create artificial demand for the
  stock.

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• To succeed with penny stocks despite these
  disadvantages, you must invest wisely.
• Do your homework Beware of shell companies that
  seemingly exist only for stock purposes. You want
  to pick companies with solid business
  fundamentals.
• Be prudent Dont invest all your funds in a few
  penny stocks. Remember, these stocks are
  volatile.
• Consult an experienced stock analyst
  PennyStocks.com has a free newsletter with a
  proven record of success!

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• PennyStocks.com has earned a name as one of the
  most trusted and dependable research firms in the
  field of micro-cap and over-the-counter stocks.
  The site offers a weekly newsletter and a variety
  of informational articles.