Penny Stocks – What Are They And Can I Make Any Money Trading Penny Stocks?

The top listing stocks among penny stocks are called penny stock picks. They are also referred to as micro cap or small cap stocks and are usually sold for less than $1.00 per share, although some sold up to $5.00 per share are termed penny stocks as well.

Penny stocks are traded on the “pink sheet” or over-the-counter (OTC), they are not typically traded on the major exchanges such as the New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX). These types of stocks are considered risky but are popular among financial speculators.

There are of course some risk factors to consider if you decide to try your hand at trading penny stocks. Most are offered by smaller, newer companies and the risks are often associated with that fact. They include stock hype, lack of visibility, reduced tradability, equity risks, and values are subject to volatility and dilution.

Penny stocks have a main advantage in that they do not require a large investment to start trading, and they can turn a minimal investment into a large profit.

Newsletter information, stock broker assistance and using one’s own personal opinion are ways to aid in choosing money-making penny stocks. There are online brokers that are available to assist the investor in trading in these types of stocks also.

Some factors to ponder when using penny stock picks are encouraging business plans, excellent trading volume and the economic stability of a company. It’s worth noting that investors should be advised of all the possible risks involved with trading penny stocks, especially with regards to free stock picks. Therefore, the more one spends on methods of penny stock picks, the better the chances that it will include picks of superior quality.