Thank you in advance
When you invest/trade in penny stock you should never put up more than you can afford to loose and you should assume you will loose it all. Unlike regular securities, penny stocks do not let you use risk cutting procedures (options and/or stop orders) since most are not traded in a regulated market place. Since there no requirement on market makers in the OTC Market it may be difficult to find a buyer when selling is required.
They say when you buy securities you have a 50%-50% chance of making money, when you buy penny stocks you have a 50-50-90% chance, 50-50 chance of making money and a 90% chance of loosing money. Since there are no meaningful regulations for trading only those with trading experience stand a chance of being successful trading in penny stocks.
Penny stocks ARE NOT for newbies. Only those with trading experience should consider trading in pennies since they understand the market, the risk and the problems associated with penny stocks.
Those with securities experience will tell you that you are foolish to start in the market by using penny stocks and those that are in business will tell you not to do it.
So with experienced investors/traders telling you not to do it, and those that are professional tell you not to do it, and even the Securities & Exchange will not recommend you do it, why do you think you can make any money.
Before you enter an order for penny stock, read what the SEC has published regarding penny stocks http://www.sec.gov/investor/pubs/microca...
Penny stocks are for suckers- experienced investors know better. Stick with mainstream stocks. It's not how many shares that matters, it's how many dollars are invested. You are in much safer territory with 100 shares of a $5 stock than you are with 10,000 shares of a 5-cent stock. Same money, safer play. Penny stocks have low reporting standards; they are very hard to research and the haven of stock manipulators.
You don't buy stocks based on price; you buy then based on value, prospects, risk and proper timing.
You can start with penny stocks just make sure they are trading 50 cents and up, don't touch anything below that. Find ones that are highly liquid ( trade large average daily volumes) And look at trend and volume spikes. Penny stocks are defined by a stock trading for less than five dollars a share. Finviz.com is good for screening stocks, I agree to stay away from OTC stocks and stick with Nasdaq and Amex
Worse investment to start off with are Penny Stocks.
Check out investopedia.cam for some guildence and
http://www.ehow.com/topic_558_investing-...
Start by reading some of the many excellent guides - the 'Dummies' series (look on Amazon) has some excellent ones on stock markets and investing generally.
I'm new to stocks and I want to start buying and selling stocks, i was wondering would penny stocks be a good start, if not how should I start.
Thank you in advance
