What are Cent StocksMany of you may have heard of Penny Stocks also called "Pink Sheet Stocks". Just like their name states, penny stocks are stocks that always sell for under a dollar a share and perhaps it may be under $5. These kinds of stocks are extremely speculative and dangerous propositions. Since these shares of small corporations don't satisfy the minimum requirements to become listed on any major stock market, they trade upon Disadvantages: Penny stocks tend to be trading so cheap for any reason. Before the costs of these shares influence your buying and selling decision, do yourself a favor and get this question, "Why are these types of stocks trading at pennies and never listed on major stock market? " If you are able to answer this question convincingly then you definitely do understand the danger associated with these types of stocks. My Viewpoint: These companies are taking a loss hand over fist without any revenues and income, poor management, more debt compared to assets and an array of other reasons. Should you look at their own price-volume action, it's extremely volatile and may be easily altered. Yes, with small to no rules on OTCBB shares, prices of small cap stocks can be very easily manipulated. For instance, if a share is trading from $0. 50 and it is average trading quantity is 10, 000 shares each day, when someone is available in to buy 5, 000 gives, that order will probably changed the character of supply and demand of the stock and influence the cost in one way or another. Advantages: The share price of small cap stocks is so low that a person with a trading account are able to buy gives. Some brokerage firms may have you sign the actual paperwork before they allow you to trade penny shares. For example, with just $500 you can purchase 2, 000 gives of $0. twenty five penny stock. the wonder of penny shares is that Having a small price fluctuation inside your direction, it can cause you to a boat fill of money however this beauty has a hefty downside. If you're caught off-guard in your trade, it will surely break you. Not all is actually that bad with small cap stocks. Some of the truly amazing companies of today once began to trade on OTCBB. Nevertheless, it is important that you research your options before you even think about purchasing your very first penny stock. There must be no room for error with one of these stocks. My Viewpoint: If I really get thinking about a particular cent stock, I would maintain it on my radar watching it more closely for many quarters as this turns itself close to with strong income and earnings development and make it's debut on major stock market. That would be considered a sign that the organization is making cash and proving it's credibility to trade together with big stocks. Till then avoid Penny Stocks!!!
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