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  • What's Penny stock investing Trading All About

    What's Penny stock investing Trading All About

    Stocks are basically the shares that are traded from a portion of a penny to $5. They may be quite risky, in comparison to the other average investments, however they possess a very good capacity to reward. In fact, several of them have risen from 25 cents to $20.00, although some may have become worthless. Lots of people who purchase trading are fond of it because they do not require a big amount of cash at the initial stage, and could own a piece of the company too.

    The plus point from it is they have an ability to convert a little investment into a big one. And also the negative point is the risk involved; inadequate corporate clarity and also the predictability regarding shares.

    penny stocks for dummies

    The US Exchange Commission and Securities have specified them as "security that is speculative, priced lower, and is traded in places such as the OTCBB and Pink Sheets".

    This could be very risky, because of the behavior of speculators or traders, penny stocks are conveniently projected by any statement that could be negative or positive, which are distributed by the issuing company so the costs are inflated or deflated; and causes a huge difference in profits or losses to the holders.

    Stock investments aren't actually transparent in comparison to the other investments and shares issued by the bigger companies, meaning there are other chances of fraud for the investors who're trading during these. As stocks have easy-going listing of requirements; there is a possibility that numerous companies who are issuing them are not following the SEC rules.

    There could even be a difference in trading locations they do not trade at the traditional trading floor. They are traded at OTC (over the counter), and highly depend on the fluctuation of market. When the market ascends, the stocks are also escalated, so when the market descends, these drop within the index. This makes them very sensitive and a risky option that need considering.

    There are different strategies for investment and goals which are accustomed to determine the current investment options, which is no different when we discuss the trading. But we are able to find a variety of people involved with businesses such as these. Normally the speculators, who purchase the Small cap stocks, are those who search for immediate profits in a short period of time. It is probable however, you cannot always bet on it.

    Added by Aubrey & Payne on Tue, Jun 12th 2012