Benefits of Penny Stocks

Penny Stocks Risks

There are many different factors to look at when evaluating a penny stock. The worst penny stocks are ones that you should avoid at all times in all markets, usually have one or several of the following criteria:

  • Trade on the Pink Sheet markets
  • Trade for fractions of a penny (i.e. $0.092)
  • Have five letter ticker symbols (the fifth letter means things like bankrupt, failure to report financials, etc...)
  • Are shares in a bankrupt company that still trade (i.e. Enron traded for $0.25 for nearly a year after the company went bankrupt. Those shares then were worth zero.)
  • Poor reporting history (no regular quarterly or year-end reports)

Penny stock brokers all say they can make you huge profits in the market. They say they will do all the work for you and you just have to sit back and watch the money pour in. The problem is that penny stock brokers don’t always have your best interest in mind!

Penny stocks make very nice commissions when you trade through them. They also are paid a flat fee for their services. Many brokers care more about making their own money than they do about your money. They could be giving unsound advice that will cost you money but still make them commission money. So how do you make money if not with a penny stock broker?

You can do it all on your own and with great success. Taking matters into your own hands could mean great things. It’s not that hard to become your own penny stock broker. You can have a lot of financial freedom doing things on your own.

There are tools and systems you can use that can steer you in the right direction of penny stock ideas. Such tools include penny stock newsletters.

These newsletters can help you pick which penny stock you want to invest into. With research and plenty of information on the internet for you at your fingertips, you can successfully trade penny stocks without needing a broker!