Making a Start in Penny Stock Investing

For the past two decades, more and more people are entering the challenging albeit risky world of pink or penny stock investing. The primary allure of penny stocks lies in the fact that they are so cheap, costing less than $5 per share. However, pink stocks are usually being offered by old companies in financial distress looking to make a recovery or new companies that need additional capital for their operations and/or expansion. These two reasons and more are what make penny stocks risky ventures.

However, penny or pink stock investing can be a profitable endeavor if you follow below important tips suggested by our experts at Paradigm Capital Management:

First of all, make it a point to do extensive research on penny stock investing before you dish out any money. You might want to check out stock market resources on the Internet on the basics of trading these kinds of stocks. If you have friends who are already in investing in penny stocks, consider interviewing them, so you will have a better idea of how the trading system works and how you can pick stocks that are worth investing in. It is also during this stage that you need to look for a brokerage firm specializing in penny stocks which will help you during the actual trading process. Make sure, however, that the broker is licensed and certified to trade on the various exchanges. You might want to consider doing a thorough background search before acquiring their services so that you won't be tricked by scammers.

Because much of the purchasing and selling of penny stocks occurs on the World Wide Web, it is advisable to sign up for an online stock trading account with such highly recommended firms as Etrade, Scottrade, and Charles Schwab. These sites have a complete list of stocks that are for sale, and they even have newsletters which provide information on the stocks that show a great potential for gain. From all the information that is provided to you, make your own list of penny stocks that look promising to you.

Once you have a list of the pink stocks that you are interested in investing in, check out the companies that are offering these stocks. Evaluate their performance, management records, financial status, and the success (or not) of any products that they are backing. It is worth investing in a company that does not have any management or financial problems, as this mean greater returns for you.

If you want greater security in your investment, check out the stocks that are being traded on the NASDAQ. Because of the stricter requirements for companies to submit financial documentation compared to the smaller exchanges, you are more assured that you will not lose money since these firms are more stable.

Last but not least, have a good knowledge of how these type of stock trading is done. Learn how you can monitor the progress of your stocks via tickers of over the counter markets where these stocks are being traded. Learn to read company financial statements and evaluate trends, so that you can predict which are the best stocks to invest in.

Discover other ways with Paradigm Capital Management by which you can make a promising start in penny stocks investing today!