Chapter 1: What Is A Penny Stock?
The first order of business here is to define just what the term; penny stock refers to. The bad news is that there are many mixed definitions out there regarding what this type of stock actually is. Therefore, you need to understand what things are considered to be penny stocks and then how to determine what the stock really is.
For example, a penny stock is a common term used to describe a stock that is inexpensive to purchase per share. This could mean:
A stock that is priced under one dollar per share
A stock that is priced under five dollars per share
A stock that is traded on what is called pink sheets
Any over the counter, or OTC, type of stock
The United States Securities Division says that a penny stock is one that is valued under the value of five dollars and is traded either on pink sheets (over the counter) or on the NASDAQ.
This would include such things as the transaction fee as well as the fee that your broker will charge you.
Pennystocks Com
Who knows if they are right for you?
The prospectus is one key element there. Yet there is a formula that needs to come from doing this. What is the companys business plan and is that feasible as well? To learn the names of the actual market makers that are dealing with the penny stock that you are interested in, simply consult the pink sheets. The risk is there and is very real yet the benefits that could happen could be very big at the same time.
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