Chapter 4: Penny Stock Bidding Success - Mark Up Pricing
There are several things to think about when it comes to penny stock investing. In the sale of penny stocks, there is an additional cost to take note of. That is the mark up price. Some broker or dealers will mark up the price of the security to a certain degree. They do this because they have had to maintain an inventory of the product. This usually happens when they need to maintain inventory sufficient to the supply demand that is out there fore orderly and liquid markets.
In other words, to you, this is likely to be an additional cost of the penny stock. This is again the built in cost factor. This cost should be taken into consideration when it comes to your investing strategy as well as what your long term goals are.
With that said, you can assume that there are some penny stocks that are less risky than others.
Graduation Price
So, to sum up, here is what you need to do to determine just what your level of risk tolerance is.
The problem is, though, that not all stock brokers are willing or even capable of selling penny stocks. A good stock broker is willing to plan your future with you and map out a plan to getting to those goals. This means that the company has a good amount of real business as well as solid equipment and a good amount of inventory. Chapter 6: More Terms To Know About Penny Stocks - Secondary Market Laws In addition, you should realize that penny stocks that are on the secondary market do not necessarily have the same guidelines or rules applied to them. In fact, there are many cases where people lose a great deal of money in penny stocks because of these factors. Why is this?
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