According to a study made by a man named G. William Domhoff, approximately 49.1% of Americans had stock investments in 2007 and the numbers are rising. This just proves how stocks are becoming very popular as investment options for a lot of people. If you also want to join the penny stocks bandwagon, it is very important that you learn the basics about them. If you are to succeed in your endeavors, you should learn as much as you can about them. You would not want to lose your hard earned money.
Investing penny stocks is one of the best ways to make money. Before you start buying and trading stocks, you should know that sometimes the definition of penny stocks vary. However, it is generally used to refer to stocks which have values less than $5. Sometimes they are also called pink sheets penny stocks.
Penny stock companies are small; they have a market capitalization of below $500 million. However, what sets them apart from other companies is the fact that they are not required by the Securities Exchange Commission to list everything about their companies. This leaves a lot of room for scams to happen and thee are indeed lots of scams when it comes to penny stocks.
Compared to other types of stocks, penny stocks are highly volatile. They have a low number of shareholders and their market trading volume is also lower. This sometimes makes it very difficult to sell stocks. There is an equal opportunity to lose and gain profits within a day.
One of the things which make people a bit apprehensive in investing money in penny stocks is the fact that there is little to mo reliable information available. Most people look for newsletters and word of mouth to guide them however; these sources are not really that reliable. It is a must to do a lot of research if you want to stay afloat in this business.