Penny Stock Brokers

Penny stock brokers aid in the sale and purchase related to companies with revenue less than $4 million which places a single stock at less than $5 a share. The rules for purchasing and selling are different than other more traditional trades, however the basics are the same. Penny stock companies are usually organizations having less than 5 years of experience or have a very narrow market. Using an investment advisor only creates a certain amount of help due to their limitations of advising towards a specific purchase for liability reasons. Evaluating the risk involved with easy purchasing and difficult selling should be taken into consideration when deciding how much money to invest in these types of stocks.

Deciding how much to invest is a personal issue, however understanding the great risk taken by purchasing a bad penny stock may alter a persons idea of how much to invest. Because these securities are low priced with possible long-term high return, investing a small percentage of investment funds into these trades may be the safer option. No one knows what the market will earn, however history shows better return in the market than with high interest bearing savings accounts. Dividing investments between at least 3 types of accounts balances the desire for high return and security. Financial advisors can suggest and educate a person concerning types of investments, however they are restricted from recommending specific stocks. Penny stock brokers earn their commission differently than traditional advisors. Sell that ye have, and give alms; provide yourselves bags which wax not old, a treasure in the heavens that faileth not, where no thief approacheth, neither moth corrupteth. (Luke 12:33)

Understanding the security and risk of purchasing and selling this type of trade is important in order to accurately make a decision. In evaluating the risk involved it is important to know what to look at as there are numerous numbers that may confuse a novice trader. The outside bid price and outside ask price are the two most important numbers especially when working without penny stock brokers. The amount of the bid price and ask price will determine the overall risk and benefit ratio of an investment. The bid price is the amount another person may be willing to purchase this investment for in the case of sale. The ask price indicates how much a person is desiring to get paid for the same stock. Though these numbers can change, overall this information indicates the amount of risk or benefit in purchasing for a certain price. Penny stock companies can graduate into NASDAQ participants, however this should not be assumed at time of purchase.

Researching both the history and mechanics of how investments rise and fall in value will indicate when a person should pull out of an investment and when to ride it out. Though there is not an exact science because no one can see into the future, some general rules apply to all investment opportunities. Some businesses have track records of extreme highs and extreme lows which can be good and bad for investors. Long-term investors dont care if they miss the mark before the plummet because they know the stock will rise again, however short-term investors need to evaluate the right time to get out without hanging on to how much money they could have earned. Depending on the reason for investing, the immediate need for the funds, and the amount invested in one area will determine the overall method of action during the life of a specific investment. Penny stock brokers can guide their clients toward research information and answer questions concerning the information read, however they will not say anything about their beliefs of when to buy or sell.

Information concerning the penny stock market is not the only information required for an informative purchase. Choosing a company that shows longevity, upward movement, and honesty is the best choice with little focus on ask and bid prices. These numbers are only important if the stock is worth purchasing in the first place. In addition to personal research of stocks and the general market, through research concerning brokers leads to an informative decision that may save significant money and time. A good broker does not apply pressure to purchase or sell, makes no mistakes in filing paperwork, and shows intelligence in all questions asked. Though penny stock brokers can answer questions about general investing information, their knowledge concerning the details of specific new businesses may be limited due to the large number, however they may be able to suggest an appropriate place to gather that information. Deciphering between slanted views and unbiased information may be difficult, therefore limiting oneself to the exposure of valid and neutral information is best.

Whenever the investment of money is considered, careful thought to the use and need will determine the level of risks taken. In some cases penny stock companies plummet faster than they rise leaving investors with nothing. If this money was intended for the education of the children that is a far lesser loss than an entire retirement account. Though both are terrible losses depending on the amount invested, in general only a small percentage of money used for investing should be used on penny stock companies. In addition to the longevity and honesty of a company, the product or service offered identifies its probability of success. The bottom line remains to use this type of trade for amusement and added disposable income, not for anything crucial.

Penny Stock Companies

Stocks from penny stock companies offer a unique challenge to the would-be investor. They are high-risk and highly speculative investments. It is true that a penny stock company may have the potential to reach the same status as any well-known, highly profitable company. The company may be well-run and offer wonderful products. Owners may follow carefully crafted financial procedures to make sure that the company has every chance of succeeding. However, it is still possible (and probably even more likely) that another bigger, better-financed company may attempt to muscle in and overcome the smaller company by using its own network of finances, connections and experience to put its competitor out of business.

To make matters even more complicated, there is no final agreement as to what constitutes a penny stock. Penny stocks are generally considered to be those which trade at $5 or less -- although some traders believe that these stocks have a benchmark of $3 or even $1 a share. At any rate, these stocks usually trade at a relatively low price, with little capitalization, and are traded outside of the major market exchanges. This usually is because the penny stock companies can not meet the listing requirements of a major exchange. Instead, these stocks are traded on a dealer network.

Some consider penny stock companies to be any company whose offerings appear on the 'pink sheets'. The pink sheets (so called because they were originally actually printed on pink paper) are a daily list of the bid and ask prices of these 'over the counter' (OTC) stocks, and the market makers who trade them. Pink sheets could also refer to over the counter trading in general, using other financial instruments, such as debt securities. The stock symbol will have ".PK" as part of its designation. Another source for trading and information on penny stocks is the Over The Counter Bulletin Board (OTCBB). This exchange is also not part of the NASDAQ exchange and the stocks will have the designation ".OB" as a suffix on their names.

These penny stock companies offer stocks which are not very liquid. Investors may hesitate to pursue investments with companies whose stocks are not often traded, and thus have larger bid-ask spreads. It is also relatively hard to research stocks whose following and history are limited. Few of these companies will be able to reach the status of the stocks which are traded on the major exchanges. Penny stocks are not subject to many of the filing or regulatory requirements which must be met by stocks traded on a major exchange. This could be considered a positive or a negative factor, depending upon one's investment strategy.

One thing which a person should consider before investing in penny stock companies is whether the stock is truly viable. How can this be determined if the stock is not subject to filing information with the Securities and Exchange Commission (SEC) or if there is little trading history available? On what basis can the investor compare the stock with its peers in the industry? Also, even if someone has done an article or comparison of the investment with other stocks, be careful to note that the writer may have a vested interest in promoting a certain stock. Perhaps he owns some of the stock himself, or is being paid to write true but overly positive information by an investor relations firm. Stockbrokers, newsletter publishers and other Internet information sources each may have a particular slant on a company's worth -- and a particular reason for coming to this conclusion. As the Bible says in Proverbs 20:6, Most men will proclaim every one his own goodness: but a faithful man who can find? Let the buyer beware.

No doubt this is one reason why the US Securities and Exchange Commission website has a whole section devoted to information for online investors. All investors, whether they be interested in penny stock companies or stocks traded on major exchanges, would be wise to read through these articles before engaging in online trading. It seems that it must be quite difficult to determine whether offers from penny stock companies are legitimate opportunities to make money or are merely clever frauds. Whether the stocks are from dealer networks or major exchanges, try to learn as much as possible about the company, its philosophy and its products and practices before investing. Keep in mind that it may be more difficult to find buyers for penny stocks. While dreaming of massive returns on the investment, be prepared to accept a long wait or even a total loss without undue regret. If this is not possible, perhaps another avenue of investment would be more appropriate. Do not invest monies which will be needed for monthly expenses in penny stocks, as losses are not only possible, but likely.

The Bible is a trustworthy source for obtaining principles which can help an investor develop a blueprint for personal financial management. Of course, care must be taken so that verses are not wrestled out of their original context in order to arrive at the desired conclusions! As a whole, though, diligence, hard work and generosity to those in need are foundational to a biblical perspective on money matters. Wealth gained from penny stock companies or other investments should be used to further the purposes of God's kingdom rather than merely for selfish pursuits. Unlike penny stocks, treasure in heaven is always a sure investment.

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