Stock Market Investments

Although most people probably know about stock market investing, fewer probably know about penny stocks and how to invest in them. Well to answer the second question first, in order to invest in penny stocks you must first know how to buy penny stocks and that is easily answered as there are stock brokers that will deal in the trading of penny stocks, not all stock brokers will but there are enough of them that do so that you should easily be able to find one. The first question as to what are penny stocks the answer is just as easy as penny stocks are shares in smaller companies, companies whose value is less than about $50 million and so the price of their shares may only be pennies instead of several dollars for the shares in companies large enough to trade their shares on the NYSE or NASDAQ. However, trading in these small shares does have an added problem to investing in the larger ones and that problem is that penny stocks, as they are not traded on the large stock exchanges, do not come under the jurisdiction of the Securities and Exchange Commission (SEC). As these small companies do not come under the jurisdiction of the SEC, they do not have provide potential investors with any information about themselves, which is a qualifying need for companies that trade on the larger stock markets. This means that penny investors are usually investing in companies they know little or nothing about which has caused some people to term penny stock investing as gambling rather than investing. However, whether you consider it investing or gambling, the fact is that the price of these shares does fluctuate and so losses and gains can be made and sometimes those gains can be huge. So huge in fact that there has become more than one penny stock millionaire and there are likely to be more. It is perhaps a bit of a gamble though as it is estimated that only 10% of penny stock investors actually make a profit with the other 90% losing their money. The benefits of penny stock investing are though that they can teach you about trading so you will be ready to trade on the larger markets when the time comes and secondly, you do not need as much money to start investing in penny stocks as you would if you were to start investing in the larger stock markets. The principles of trading penny stocks and larger stocks are the same though and those are to buy cheap and sell when they rise in value. OF course, if a penny stock trader had had shares in one of the big corporations from when it was just a small company, they would have made good money on that company’s success and that of course is what penny stock investors hope for. So investing in penny stocks can be a bit of a gamble but it could be a gamble that can have some big paydays.