Penny Stock Picks

Penny stocks- an introduction: If you are well aware related to penny shares and prefer to invest a lot of fund in penny shares, you will be interested to understand how to pick penny shares. You'll find a list of several shares to become exchanged at the website of pink sheets and will be interested to invest in a lot of of the future Microsoft or Wal-Mart. This can happen only if the trader picks a right penny share otherwise he or she could lose the amount.

Limited news for penny shares: It's very very difficult to obtain news on penny shares, as there are reliable sources with us. Major of all the news offered by the business could not be the correct one and suppose if the news offered is correct, it could not be relevant.

For penny shares we are not sure methods to find news related to the businesses providing penny shares. These firms have to provide a very little news to Securities and Exchange Commission (SEC) and get easily listed at pink sheets. These firms are therefore not regulated by SEC, as is the case with businesses listed at NASDAQ or NYSE. Furthermore the history of the businesses listed at penny shares is not obtainable. The businesses could be bankrupt or new having no experience of organization and thus could be highly risky. A new trader must therefore carry out the exploration related to the businesses before putting their hard earned fund into the market.

The next restriction on penny shares is the restricted liquidity. Sometimes it's difficult to sell the share, as you could not find the buyer for it. Having very low liquidity, you could have to sell the share at hefty discount causing you a heavy loss. Sometimes the brokers manipulate the penny shares in various strategies and could cause you sever loss so until and unless you don't know the basics of share market keep away from trading massive amount in penny shares.

Prospects of fraud: As the businesses providing penny shares aren't scrutinized or regulated by government agencies or The Securities and Exchange Commission (SEC), penny shares are further prone to fraud. Most of the times the businesses spread rumors related to their monetary performance and other related problems and mislead the traders. A lot of times these businesses take the assistance of media such as newspapers, radio or email and hype related to the penny shares supplied by all of them. You could get a number of emails (spam) from their agents as well. These firms also pay for a lot of monetary consult for recommending their penny shares to the traders.

Selecting the right penny share: Even though the market of penny share is highly risky, there are good businesses also at OTCBB and pink sheets. The real understanding is required to identify the good penny share and some exploration is required before putting fund in penny shares.

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