Finding penny stocks requires a little more from the investor than calling up his or her broker and issuing a buy order. The investor must explore a number of online resources and research and evaluate a company’s financials. Penny stocks, also known as micro-cap stocks, are generally issued by new companies facing liquidity, equity, or profits challenges. Some of these stocks have been delisted from the major exchanges, so they are working their way back to the big board. These stocks are not held to the strict filing and listing regulations of other stocks, so investors may need to do some leg work to uncover good penny stocks.
Most penny stocks are not traded through a traditional brokerage firm. Since they trade at less than $5.00 a share, most penny stock investors open an account with an online brokerage firm. This allows them trade stocks without paying heft broker fees. There are many online resources and penny stock finder services that can help the investor identify solid penny stocks. Using these penny stock finder services, an investor can identify some hot stocks and do some independent research.
Penny stocks appeal to many investors because of their low price. Investors with limited capitol can purchase a large quantity of stock for a small investment. These investors are looking for volume stocks. When an investor makes a solid penny stock purchase, even moderate gains can add up. Of course, penny stocks are riskier than more traditional stock purchases. Modest losses can drain your balance t quickly, simply because of the sheer number of stocks purchased. Utilizing stop orders can help manage big losses, but investors need to stay on top of their portfolio and keep an eye on the stocks movement and overall market trends.
Most investors turn to websites and online discussion forums for advice about getting good penny stocks. These sites can serve as a penny stock finder, offering recommendations and limited research for a subscription fee. There may be a free limited trial offer, so you can register with the site and track their stock picks to see how accurate they are. Listening to other investors and asking questions about their portfolio on the online chat rooms is another penny stock finder option. Use this information to track trends in the penny stock market.
When utilizing a penny stock finder service, pay special attention to the diversity of the stocks. Ideally, you should spread your money around and invest in different companies, and industries. Even geographical diversity can make a difference.
Penny stock investors are not long-term investors, so their investment strategy is not designed to outlast the volatility of the market. Penny stocks are a great option for investors looking to play a hot tip or trends using a little extra cash they want to turn into a profit. Penny stock finders will help you identify the right stocks for your portfolio.
If you decide penny stocks are right for you, remember to stay disciplined stay balanced, and prepare yourself for a wild, and hopefully profitable ride.
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