There is no approved definition of penny stocks. This term consist of two words: penny and stocks. The word stock means the original capital invested in the business by the founder whereas the word penny means the smallest denomination in a currency system. As both terms suggest, these stocks are generally low-priced securities issued by small companies. So to define penny stocks it is reasonable to say that penny stocks are common shares of small public companies that trade at less than $1.00.
Before investing in Penny Stocks, it is preferred to obtain basic information about them. First and most important: Trading can be risky! So before you invest in such stocks, read about the company. Don't allow yourself to be pressurized by the sales person, instead ask why his or her firm has determined that penny stocks are a suitable investment for you. It is worth remembering that these stocks may trade rarely, which means that it may be difficult to sell stock shares once you buy them. In short make a good judgment keeping in mind the scenario. Furthermore bear the possibility in your mind that you might lose your whole investment. So think carefully before you act. Remember that the salesperson is getting paid to convince you to buy those stocks, therefore, don't rely entirely on him/her. Instead seek outside sources for information.
Before you buy a stock, federal law requires a salesperson to tell you the bid on the stock, and the compensation the salesperson and the company receive for the trade. After the trade the company should also send a confirmation of these prices to you. This information is important to evaluate what profit or loss, if any, you will have when you sell your stock. Also they are extremely easy to manipulate since the prices are low and investors can buy a lot of shares at once and then dump them back again to make a profit. Often in emails, newsletter and website people come across attractive offers proposing definite success. Never believe them. You know nothing about the company and it may be a hoax. It is useless to blindly believe in high returns.
All in all it does sound like an attractive venture to make profits but one must consider the negative aspects related to it as well. It involves high risks and one must be very careful when it comes to this type of trading. However, different people have had different experiences and we can't say for sure if you should or should not go for opportunities like these. The right thing to do would be to thoroughly research on this subject and then come to a decision.
Visit the official website of Jackpot Penny Stocks if you wish to know more about penny stock trading.
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