Best Penny Stocks How To Find Them

If you are a first time investor penny stocks can be alluring as well as dangerous

. It only takes a few hours for these types of stocks to shoot up 100% and as the investors watch, their investments can all of a sudden spiral down the drain. But those that have been trading and know the tricks of investing can avoid losing their money.

There are various scammers that literally just pump and dump stocks, so you have to know how to avoid losing and know how to pull triple digit gains legally and safely. When it comes to trading successful companies are made, and they have worked their way from the bottom to the top of the rank. However, there are investors that forge through stocks in hope of finding the next big Wal-Mart or similar.

Sadly this type of strategy in most instances proves to be unsuccessful. And having high hopes on these types of stocks could make you lose your entire wealth. Micro cap stocks and penny stocks are interchangeably used and micro caps are based on their market capitalization, whereas penny stocks are based on their price. Stocks vary with a capitalization of around $50 to $300 million is termed a micro cap, and less the $50 is a nano

According to the SEC stock under five dollars is considered a penny stock. Some traders cut off point is at $3, and others cut off point is less than $1. However, anything trading over the counter or on the pink sheets is a penny stock. These types of stocks are far riskier than your normal stocks.

There are many factors that make penny stocks riskier and the major factor is the lack of information available to the public. The key to any successful investment is acquiring sound information in order to make sound decisions. Any company that lists itself on the pink sheets are not regulated to file with the exchange commission or securities, and due to this fact are not publicly regulated as stock representatives on the NY stock exchange.

The information that is available on penny stocks and micro caps is not credible. Stocks on the pink sheets do not have any standard requirements in order to remain on the stock exchange. Is a company can no longer hold its position on the major board, they then drop to one of the smaller exchanges.

by: D Haynes

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