Most people want to invest in penny stocks even though they know that this type of stocks is much riskier than the regular stocks. Penny stocks are those stocks that are sold at a very cheap price of less than $5 per share; thus, many investors can own plenty of shares easily, even though they do not have plenty of money as capital. Penny stocks are not sold in major stock markets just like the regular stocks. These are sold through over-the-counter (OTC) markets or pink sheet markets. However, not like the stocks that are listed in over-the-counter markets, those that are listed in pink sheet markets are not required to file their financial reports with the Securities and Exchange Commission (SEC), thus, they are much riskier to invest into; and so extra caution and prudence need to be practiced.
How to buy penny stocks?
Just like the regular stocks, penny stocks may be bought with the assistance of some stock brokerage firms, such as the discount brokerage firms and full service brokerage firms. These penny stock brokers will generally do the actual purchase of stocks according to the instruction or orders of the investors. With a discount brokerage firm, the investors may make trades right away with little effort. But the investors are expected to know which stocks to buy, as the discount brokers do not offer advice on which stocks to buy. The main advantage of a discount brokers is that they are very cheap when it comes to their service fees and commission rates. [click to continue…]