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.
Determine what risk level you are comfortable with and the type of penny stocks that fits those needs.
Recommended Penny Stocks
There are no necessarily strict listing standards applied to those penny stocks.
If you can not find anything out about the company then you may want to take into consideration a different penny stock. Usually, people are hands off in this situation meaning that they will tell their broker what they would like them to do and the agent does just that. In other words, companies that are valued higher than this amount, those that have more inventories, for example, are those that regularly trade on the stock market.
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