Posts Tagged ‘Buy Stocks’
Invest In Penny Stocks – How To Buy Penny Stocks Online?
Written by troy on Tuesday, April 07, 2009 | 1 Comment
Categories: Uncategorized Tags: Buy Stocks, Common Shares, Invest Stocks, Otc Market, penny stock, Stock Trading
To calculate the market capitalization of a company (the market cap) you must multiply the stock price of the company by the amount of shares that are outstanding. By carrying out this calculation you can find out what the total dollar value of all shares in the company are at any given moment in time. Penny stocks are not traded on a stock exchange like other stocks but they are traded in the over-the-counter (OTC) market. For the trading of most stock an agent will act on the investors behalf and arrange a transaction directly between the investor and a third party. The broker then receives a commission for facilitating the trade.
A large proportion of all penny transactions are charged by brokers as principle transactions. This means that the broker is not paid any commission but rather makes its money on the spread, and by buying and selling at advantageous times. There is no single price at which penny stocks are bought and sold, but rather there are a number of different prices. The difference between the bid and ask price is known as the spread. The spread of many penny stocks are usually around 25-33% but can often be 50-100% or even more. There are also always two bid and two ask prices, these are known as the inside and outside bid and ask. Keep in mind that it is the outside bid and ask that is of most interest generally. Penny stocks are also subject to mark up pricing. This is where a broker has held the penny stock in its account and has therefore taken some of the risk associated with market price fluctuation.
Although penny stocks are quite complicated and there are many problems associated with trading penny stocks as well as millions of dollars of loss, many companies still trade in them because they can help for example, struggling companies just starting up. The best way of finding a good investment is by consulting with your broker. However in the penny stock market be very wary of brokers who are only trying to sell and may not have your best interests in mind.
By: Mike Singh
About the Author:
Things You Should Know Before Investing In Penny Stocks
Written by troy on Tuesday, February 03, 2009 | No Comments
Categories: Uncategorized Tags: Buy Stocks, Counter Bulletin Board, Investing, otcbb, penny stock fraud, penny stocks, Pink Sheets, stock exchange
Companies that are usually listed on Pink Sheets are those who are just starting out and have not yet developed to meet the basic requirements needed to be publicly listed.
What are the advantages of investing in penny stocks?
The main advantage that an investor can get from penny stocks is its low price. You can buy thousands of penny stocks for a low amount. Also, Pink Sheets and OTCBB are very easy to get into as opposed to the regular stock exchange companies. Also, you may not know it, but it is possible that you are investing in the next big company which will bring you a substantial amount of financial wealth.
What are the disadvantages of investing in penny stocks?
The main disadvantage when it comes to investing in penny stocks comes from dealing with companies who are offering them. Pink Sheets only requires a company to have a broker in order to be publicly listed. No financial and incorporation papers are needed to prove the authenticity of the company. You will have no means of getting information about the company. You will have to research on your own and check out the background and financial standing of the company. Another disadvantage is that penny stocks entail a higher risk compared to other securities.
What are the warning signs of penny stock fraud?
Since Pink Sheets and trading Penny Stocks is very easy to get into, it can be a paradise for scammers. There are already many people who have fallen victim to penny stock fraud and as an investor; you must be able to know the different warning signs when it comes to penny stock fraud. Some of the warning signs that you have to be on the lookout for are unauthorized transactions and mismarked trade confirmations. Even if your stockbroker is handling all the transactions, you should also be aware of everything that is happening.
At the end of every transaction, your broker will provide you with a trade confirmation that will be the evidence for the transaction made. In this trade confirmation, you will find basic information like how many shares were brought for how much, the ask/bid price at the time of the transaction and other background information.
If you see that there are wrong information inputted in the trade confirmation, call the attention of your broker and have it changed immediately. Also, if you see transactions being made in your account without your knowledge, notify your broker. It may be an honest mistake, but it also can be a potential penny stock fraud in the making.
The best thing that you can do to combat penny stock fraud is to be well-informed and be vigilant when it comes to approaching penny stock trading.
By: Nir Dotan
About the Author:
Nir Dotan is a writer and promoter of
Penny Stocks
services, and
Penny Stocks Preferred source for the latest news and information on the best and brightest Small Cap Stocks.