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.
First off, the broker needs to provide you with all of the necessary information you need to make a decision.
Think Pennystocks
Selling quickly will not allow you to break even.
You have to determine what that combination is for you personally. This is the only real way that you will see any real appreciation in the value of your penny stocks. Remember, pick up the phone and call them. If you can take some time to do your homework, in other words, you are likely to find benefits along the way in the penny stock. This means that the company has a good amount of real business as well as solid equipment and a good amount of inventory. The pink sheets are actually a part of the OTC market.
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