How do I get into penny stocks

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How do I get into penny stocks?
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Beginner investors get their feet wet by first
swirling their toes in penny stocks. As implied
by the name, penny stocks are share held by
companies with a low trade price usually 5 or
less. New investors can easily get hooked by
penny stocks because they require a small
percentage of capital investment. The low share
prices enable investors to purchase thousands of
shares and potentially earn a substantial return
(the reverse is true as well).
Seasoned investors generally stay away from penny
stocks because they are risky and highly
speculative. Penny stocks have small market
capitalization, limited disclosure, and large
bid-ask spreads, limited following and lack
liquidity.
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If you want to get into penny stocks, take the
following steps
Signup for Penny Stocks Newsletters" and Get
Alerts
Penny Stocks newsletters help you stay informed
about current and upcoming trends in the penny
stock market. These newsletters are vital tools
for retrieving up-to-date information on buy/sell
alerts and stock prices. Some newsletters have
chat rooms, community forums and valuable
training materials. They will be your ticket into
penny stock market.
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Conduct a Penny Stock Search
Mainstream stock exchanges such as the NASDAQ and
NYSE have minimum bid price requirements of 1
per share. Otherwise the stock will be delisted.
Penny stock traders therefore turn to Over The
Counter Market. OTC Market Groups arranges
securities into ranked marketplaces in order to
reflect the degree of investor engagement,
disclosure and integrity of operations.
Narrow Your Trading Candidates
After you understand where penny stocks can be
traded, determine which stocks youd like to
trade. You can use stock screening tools to find
stocks listed at less than 1. Narrow this list
down according to your risk tolerance and
strategy.
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Understand the Risk
Penny stocks are infamous for being risky. Many
of the companies listed are small-cap stocks that
are vulnerable to serious volatility. Liquidity
is a genuine concern amongst penny stocks. It is
definitely not uncommon for investors to wait
around for weeks in the end for enough demand and
supply to be generated so that they can exit
before serious price fluctuations occur.
Investing in penny stocks is a gamble. It is a
risk worth taking if you understand all the
variables involved. To get started, open a
brokerage account, conduct a penny stock search,
narrow your company choices and understand the
risk. By taking these steps, you will be set up
to get into the explosive world of penny stocks.
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