If you would like to get into the stock market but are hardly wealthy or even particularly solvent at this time, consider penny stocks. No, they do not necessarily cost pennies, but they can. They are cheap.
They were indeed, once selling for pennies but the SEC and the financial service industry now deems those up to five dollars as penny stock. Here is where you can get your feet wet without winning the lottery. Begin researching small companies under the radar. This is where you can earn money as they grow. Also look for previously good companies fallen on hard times. Chances are they will recover with restructuring and fresh cash outlays. The auto companies are a good example.
To begin buying and selling, you need a brokerage account. Ask someone to recommend one or do some online research. If you have no idea how to begin, the staff will walk you through the basics although they will not do your picking for you. That will be your job.
If you want a little experience first, go virtual. Register with an online stock market site and let the games begin. You work with virtual money in the real market. This will let you know how good you are at picking stocks. Also, follow a few companies for a month or two and see what moves and where. Get a feel for the market before actual money is laid out.
There can be several reason why penny stocks are a risk. The most significant is a lack of transparency. If a company obscures its bottom line or any other variables, ask yourself why and move on.
To help lessen risk, if you cannot get information from a company representative, lean about the actual products and services if offers. Study their marketing, their influence, their inventiveness, their place in the industry. A good way to start is to invest in companies with products you are familiar with. This will make it easier and more interesting. From fashion to fabrications, from food to fuel cells, any special knowledge you have will be to your advantage.
Subscribe to the penny stock newsletters. There are many. Look online to do your research. Use sites that help with this. In the meantime, keep alert to news and opinion in your area of investment. Often an insignificant piece of information contains a tip worth pursuing.
As a rule, stay with the big stock exchanges. And learn how to read symbols and signs. Certain letters mean bankruptcy. Find out what that means and how it effects the future. Read financial journals daily and it would not hurt to tune into TV commentary either. PBS has a good nightly program.
There are stocks trading on what is referred to as a Pink Sheet. Tread lightly. It usually means stocks trading for pennies or fractions of pennies. Do your research if this is where you want to go. Some companies are small or very new. That does not mean they will not grow. Do your analysis and be confident in your judgment. Learn all you can about penny stocks before you invest. Then go for it. In time, if you are a savvy, and determined investor, you will be playing in the bigger field.
Prospective investors, you can find details about many benefits of investing in penny stocks and more information about the reasons why you should read Penny Stocks For Dummies on our website, now.
Source: http://www.divinewriters.com/2012/02/for-a-practice-run-invest-in-penny-stocks/
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