Dummies Guide On How To Invest In Micro Cap Stocks
Dummies Guide On How To Invest In Micro Cap Stocks
You may have heard that an investment in micro cap stocks can turn a small amount of money into a substantial profit but before going any further you need to know that the risks associated with investing in penny shares are much higher so its easier to lose more money.
The golden rule of any investing is to do your due dilligence first and never enter an investment based from a tip, especially if you saw it in your email spam. Small cap shares that have been emailed to you as spam are always the ones to avoid because small cap stocks are not subjected to same rigorous regulation as other more established stocks and this leaves the door open to fraud.
The owners of the shares in the email spam can sometimes pay brokers to create hype about their stock causing the price to spike so they can offload their stock and the price crashes again leaving you with a loss, holding a stock that is worth nothing.. So the motto of the story is always do your research first.
If you are looking to find out the difference between an investor and a trader check out How To Trade Small Cap Stocks}
You to need to sign yourself up with a brokerage account in order to invest in small cap stocks which will execute trades on your behalf. The best type of account is probably an online trading account because the commissions are cheap and you can get instant access to the markets. To set yourself up with a broker you fill out an application form and once its been approved and you have funded your account you can start investing!
Its tempting when you are starting out to make an assumption that because small cap stocks are so cheap to put all your money into the one share however this is a trap to avoid. The stocks that have shares listed so cheaply i.e.one cent are generally not very good companies to invest in hence why they're so cheap! But bear in mind that some stocks are cheap because they are just starting out and these can make good investments over time, but as you become more experienced you will learn how to recognise good ones from bad ones.
If you are ready to take the next step in your investment career check out this comprehensive guide Penny Stocks For Dummies}