Difference between revisions of "Pick and Trade Penny Stocks"
(importing article from wikihow) |
m (Update ref tag) |
||
| Line 11: | Line 11: | ||
#* Consider using a small portion of your investment to buy penny stock while investing the bulk of your funds in less risky securities. By doing this you will open yourself to the possibility of high return through penny stock gains, but you will protect the greater part of your investment from loss by rooting it in more secure investments. | #* Consider using a small portion of your investment to buy penny stock while investing the bulk of your funds in less risky securities. By doing this you will open yourself to the possibility of high return through penny stock gains, but you will protect the greater part of your investment from loss by rooting it in more secure investments. | ||
#* Penny stocks are more suited for short term investments, or frequent buying and selling with discretionary funds. Most penny stocks are sold by small businesses trying to get started, so it won’t take more than a year to know whether or not the company is going to survive and do well. | #* Penny stocks are more suited for short term investments, or frequent buying and selling with discretionary funds. Most penny stocks are sold by small businesses trying to get started, so it won’t take more than a year to know whether or not the company is going to survive and do well. | ||
| − | #* Some people think all stocks start as penny stocks – most don’t. High value stocks like Apple, Google, and GM all started out on a secure stock exchange, unlike penny stocks. While a few penny stocks will eventually grow strong enough for sale on an exchange, most won't, and most high-value securities did not start out as penny stocks.<ref>http://www.investopedia.com/articles/03/050803.asp</ref> | + | #* Some people think all stocks start as penny stocks – most don’t. High value stocks like Apple, Google, and GM all started out on a secure stock exchange, unlike penny stocks. While a few penny stocks will eventually grow strong enough for sale on an exchange, most won't, and most high-value securities did not start out as penny stocks.<ref name="rf1">http://www.investopedia.com/articles/03/050803.asp</ref> |
# Prepare yourself for loss. The reason penny stocks are so cheap is that they are inherently very risky, and often the underlying businesses fail. Most investors who buy and sell penny stocks are aware of the fact they will lose some of their investments – they are looking for a few gems among stones that will provide high returns. You should consider this as you prepare to invest. | # Prepare yourself for loss. The reason penny stocks are so cheap is that they are inherently very risky, and often the underlying businesses fail. Most investors who buy and sell penny stocks are aware of the fact they will lose some of their investments – they are looking for a few gems among stones that will provide high returns. You should consider this as you prepare to invest. | ||
=== Researching Penny Stocks === | === Researching Penny Stocks === | ||
| Line 23: | Line 23: | ||
# Consult the experts. While you should ignore solicitations to buy penny stocks, you may have more luck reading on sites like BusinessWeek and Google Finance, where investment writers share their tips on penny stocks. This research is more reliable as it is not paid for or endorsed by a specific selling company. Use these sources to learn as much as you can about a company from others who have done the same research. | # Consult the experts. While you should ignore solicitations to buy penny stocks, you may have more luck reading on sites like BusinessWeek and Google Finance, where investment writers share their tips on penny stocks. This research is more reliable as it is not paid for or endorsed by a specific selling company. Use these sources to learn as much as you can about a company from others who have done the same research. | ||
#* You may also speak to a financial advisor on penny stocks, but know they might not want to advise you in purchasing high-risk securities. Advisors are required to speak explicitly with investors about the risks of investing in penny stocks, and many advisors refuse to practice penny stock investing because it is simply too risky. If you do find someone who will work with you, they can assist you in doing research and finding financial information on companies selling penny stocks. | #* You may also speak to a financial advisor on penny stocks, but know they might not want to advise you in purchasing high-risk securities. Advisors are required to speak explicitly with investors about the risks of investing in penny stocks, and many advisors refuse to practice penny stock investing because it is simply too risky. If you do find someone who will work with you, they can assist you in doing research and finding financial information on companies selling penny stocks. | ||
| − | # Beware of penny stock scams. Many shady businesses sell stocks in shell companies that don’t even operate their own businesses in the hopes of making money by selling stocks before bailing. You should avoid investing in anything you receive solicitations to buy, as these solicitations are often paid for by scammers looking for windfall sales. Instead, limit your purchasing to stocks you find or learn about through reputable sources.<ref | + | # Beware of penny stock scams. Many shady businesses sell stocks in shell companies that don’t even operate their own businesses in the hopes of making money by selling stocks before bailing. You should avoid investing in anything you receive solicitations to buy, as these solicitations are often paid for by scammers looking for windfall sales. Instead, limit your purchasing to stocks you find or learn about through reputable sources.<ref name="rf1" /> |
=== Purchasing Penny Stocks === | === Purchasing Penny Stocks === | ||
# Create an investment account. Once you have made a decision on what company or companies you want to buy penny stocks from, you need to register with a platform to make trades. Most trading platforms, such as eTrade, AmeriTrade, and others all offer access to penny stock trading. | # Create an investment account. Once you have made a decision on what company or companies you want to buy penny stocks from, you need to register with a platform to make trades. Most trading platforms, such as eTrade, AmeriTrade, and others all offer access to penny stock trading. | ||
