Posted on 12 March 2012. Tags: penny stocks for dummies
Learn about the penny stock market in a penny stocks for dummies style. This is a good way to start into this financial market for both the experienced trader and the neophyte. While there are many skills that an experienced trader can continue to use in this new arena, there are also several differences between the penny stock market and the major exchanges.
The market value of the stocks is the first significant thing that you will learn from penny stocks for dummies. While it may seem obvious, this fact should not be overlooked. The small size of penny stocks allows you to do more than just buy shares cheaply. With just $20,000, you could buy 400,000 shares in a company that sells its stock for just five cents. Besides understanding the earnings power in these low-priced stocks, you should also understand that you become a major shareholder in the company.
The size of that five cent stock is also important to understand when you learn penny stocks for dummies. Its low price can actually generate incredible returns. If its value increases by just one penny, this stock will add 20% to the total value of your assets invested in this company. The same change in value in a conventional stock would be almost meaningless.
Once you know a little about penny stocks, you should learn about where to find them. Usually, you cannot buy these shares on the regular stock exchanges. Instead, you have to look for them in the over-the-counter market. These markets are much different. The Securities and Exchange Commission does not provide oversight for them. When you learn penny stocks for dummies, you learn that you must take care of yourself because there is not a regulatory agency to oversee things.
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