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.
Most people understand that a risk is something that is associated with the amount of safety that something has.
Penny Stock Tip
Yet, when the stock does not have any additional buyers, which is likely to happen quickly, the stock will bottom out or simply fall through leaving everyone with a stock that has nothing to it.
But, with a foundation of solid knowledge, you are sure to make the best decisions possible when it comes to penny stock investing success. If you are looking to sell your stock, you need to know what you could get for it. He then creates a market of his own by stirring up sales.
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