| Buying Penny Stocks is risky business and yet it can | | | | The final step is to satisfy any concerns or questions |
| be very profitable. Huge stock market fortunes are | | | | about any potential fraud that may be occurring with |
| made every day! Many of the more popular stock | | | | an offer that is made to you by contact state or |
| around were once Penny Stocks including Microsoft, | | | | federal securities regulators. |
| Nike, and Walmart. A penny stock is a stock that is | | | | It is important to note that investing in penny stocks |
| either priced for fewer than five dollars, or one-dollar | | | | can bring you extremely good profits in a short time |
| stocks. Penny stocks are only traded on the | | | | period but it can also result in huge losses in a short |
| over-the-counter (OTC) market. There are six steps | | | | time frame also. This is due in part to the usually risks |
| you should take before buying penny stocks. | | | | that are involved in trading as market forces operate |
| The first step is to get information by asking a | | | | and also due to the high number of fraudulent |
| broker for written data and recommendations on | | | | practices by those who are selling these kinds of |
| penny stock companies. | | | | stocks. Companies issuing penny stocks have no |
| The second step is to find a good broker by doing | | | | regulatory requirement to make their financial |
| some research about their history and their track | | | | statements available to the SEC, thus adequate and |
| record in investing. Also check to see if there have | | | | pertinent information will be very difficult to come by |
| been any complaints made against them. | | | | which makes it truly hard to properly evaluate a |
| The third step is to keep good records. Ask your | | | | stock. |
| broker to send you a written copy of all predictions | | | | Under normal situations investments in stock with |
| about the price of a stock and about the prospects | | | | potentially high returns over a short time frame tend |
| for the company. Keep notes about each broker. Get | | | | to be risky, but with penny stocks this risk is greatly |
| other opinions about the stock and the company | | | | increased by the high level of fraud that occurs in |
| from people who should know including a banker, | | | | trading these stocks. In recent times many investors |
| other stock brokers, and financial planners. | | | | have become more sophisticated and aware so there |
| The fourth step is to use common sense. Question | | | | is less problems associated with these stocks. |
| yourself as to why the broker is offering these to | | | | These days it is still possible to buy penny stocks and |
| you. Remember, if something is too good to be true, | | | | make a lot of money in the market. It is however |
| it probably is. | | | | necessary that you choose a broker wisely and |
| The fifth step is to not be rush to make a purchasing | | | | employ your common sense. Remember that with |
| decision. If there is not adequate time for you to | | | | big rewards there are also even bigger risks. You |
| check out each stock investment carefully, do not | | | | should also never invest more than you can afford to |
| invest. | | | | lose. |