Providence, Rhode Island (PressExposure) April 25, 2012 -- You may have heard investing in penny stocks is full of risk, notwithstanding Investing in any company in general is precarious business, even so if you are going to be trading in the penny market you have to make yourself prehensile about every company to steer clear of the imposition, rip offs, pump and dumps, and other schemes to alienate you from your agonizing earned chips.
So what exactly are Penny Stocks and how can you make money trading them?
Penny stocks are those priced at $5 per share or lower, not issued by an investment advisor such as a closed-end fund, and not listed on a national exchange. They are usually issued by smaller companies, which get little or no analyst attention or other market notice
Several new investors are attracted to penny stocks, given their low price and potential for substantial gains. There have been instances where penny stocks rose more than 1000% in a few days in the past
When buying stocks you buy shares of a company. This company has decided to expand its activities, and to do that it needs money. One way of obtaining funds is to issue shares. The company has to be listed on the stock exchange, where the shares of all other listed companies are traded. Despite fluctuations, the share price of a prosperous company usually rises, but it can also drop when the company, for instance, does not show a profit.
The analysis required to determine which penny stock to invest in for the long term requires a great deal of fundamental and technical knowledge. What's the company's PE ratio? How do their balance sheets look like? How's their cash flow? (finding this information is even more difficult for penny stocks as some penny stocks do not have any earnings or revenue). Is the industry they're in thriving? Who are their competitors? How are the support and resistance levels? What about candlestick charting analysis? Are they on an uptrend?
Investing in penny stocks requires a lot of background research and knowledge. this is why penny stock newsletters are so popular. A penny stock newsletter will send out a list of hot penny stocks at set intervals. One of the most popular penny stock newsletters is Penny Stock Egghead. But can you really trust Penny Stock Egghead or is it a scam?
View our review and learn the truth: http://pennystockeggheadreview.webstarts.com