Few vital things to know before you buy Penny Stocks

June 27th, 2011 by Guest Leave a reply »

Penny stocks gives the average people an opportunity to invest their hard
earned money in the share market that will help their money to grow. Buying
these types of stocks can be a risky venture but there is risk in any type
of investment plan especially after the recent economic downturn.
According to the Security and Exchange Commission (SEC), these stocks
have been termed as penny stock because they are available for less than
five dollar. On the Pink Sheets or Over the Counter Bulletin Board (OTCBB)
the stock companies are enlisted and trade is executed here which is
popularly known as penny stock market.
It is advisable to invest in good stocks to lower the risk associated
with the investment plan. But it can be a difficult task for the prospective
investors to locate top penny stocks. The share market might fail to provide
information regarding the companies dealing with penny stocks as these
companies are not enlisted with them. According to the government rule, now
the small scale companies are required to provide information on operating
expenses, revenue report, board of directors meeting and stockholder votes
to the Security and Exchange Commission (SEC).You can browse through OTCBB
website to get information on the stocks.
You should be aware of the rules before buying penny stocks. You can buy
many penny stocks as the prices are low and sell them with the rise in the market value. This will help you earn a good profit after selling the shares.
But you should remember that the investors cannot trade more than five
times a week according to the government regulation. In case the investors
violate the law then his account will be on hold for ninety days.
 Before you start buying the stocks make sure that you get required
information on the companies. Try to check the companies’ profit margin
where you are investing your hard earned money. Make sure you invest in
established companies. You should invest in companies that will help to
maximize your profit with minimum loss.
Author: This article has been written by Angela Sanders. She is
associated with Oak View Law Group, A Trustworthy
Bankruptcy Law Firm.

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