Understanding How Penny Stocks Work...

Penny stocks generally have a bad name and to be honest here, there is a reason for that. Statistically speaking, 95% of the penny stocks out there are not good investments. Many of them can be absolutely ridiculous but at first glance, it can be hard to tell apart the top penny stocks from the rubbish ones unless you understand the literal definition of trading with penny stocks.

When it comes to penny stocks, it is important to know who you can bring yourself to trust. Penny stocks are not for everyone so obviously before getting started with the concept, you need to brainstorm a little, asking yourself pertinent questions. Are penny stocks right for you? What are the risks you might run into? What are the biggest pitfalls going around out there? To direct you to high quality shares that can really multiply your investment dollars, Truepenny Stocks has a team of members absolutely dedicated to finding companies that have proven management teams, rock solid fundamentals, growing market shares and an excellent upside potential.

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What are Penny Stocks?

Penny Stocks

By definition, penny stocks are shares that trade for less than $5, at bargain prices, because they are undervalued, undiscovered or else overlooked. In the past, the shares of some companies have gone from 25 cents to $20 so clearly there is a tremendous reward potential where hot penny stocks are concerned.


As we mentioned above, worldwide, penny stocks have a bad name but perhaps that’s only because up until recently, there has been an undeniable lack of information and resources about the penny stocks to watch out for. These days, things are structured a bit differently and investors see penny stocks as being nothing but the representation of small companies that have an incredible upside potential only that they have not been discovered yet. Of the many reasons why people go into penny stocks is the fact that it does not take a lot of cash to get started. You can come to own a piece of a relatively good company inexpensively.

The biggest upside of buying shares at bargain prices is that you are presented with the possibility of turning a small investment into a fortune but obviously the downside is the lack of corporate transparency and the volatility of the shares you buy. Many people might not be aware of this but companies like Playboy and Ford started out as penny stocks so there are shares out there that can transform regular people into millionaires with a small investment turning into a little fortune.

Benefits of Hot penny stocks

Hot Penny Stocks

When it comes to penny stocks, the key is to get to the right stock at the right time. While the game is obviously not meant for everyone, trading in penny stocks represents a rewarding form of investment in more ways than one. 

1. For start, you got to think about the money. With the right penny stock picks, you can easily transform a few hundred dollars into a few thousand dollars and you can get there just by remaining steadfast in researching the best shares in the different markets

2. Penny stocks represent the only way for people to become part of a company before it turns into something big, becoming a monster out for the kill. By investing in the top penny stocks, you can become part of something big without actually having a degree in your drawer at home or field experience in the cutthroat world of business.

3. Making sense of the endless list of penny stocks and trading in the shares is a great way of learning about the different markets out there without actually committing to any one of them. You make the best of the different worlds and equipped with the knowledge you will undeniably develop, you will later on be able to settle in a field that you think has a great potential.

4. Trading in the top penny stocks is exciting and there is a significant potential for rewards there as well. You can get started with a few hundred dollars and no baggage to speak of. Currently, thousands of investors are reaping benefits from penny stocks; you can join them right away.

5. Penny stocks are on the rise. More and more investors are getting involved in this game and with the S.E.C. cracking down scams; the list of penny stocks left behind is pretty safe.

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Getting Started

Stock Started

Investing in penny stocks is relatively easy. To start trading, you will need a brokerage account and obviously, you will need to pay your broker a fee each and every time you buy or sell a stock. To get a brokerage account, you only need to contact a brokerage service and open an account with them. To get a feeling about the different brokers out there, research them a little. Don’t just pick anyone. To learn about how to get started with trading the best penny stocks, you can subscribe for newsletters on the investment websites out there. Independent online resources are a great way of learning about how penny stocks work.

If you want to speed things a little and get to the part where you start making money faster, then you might want to take advantage of a professional website like this one where you can subscribe for newsletters to be sent out to you. These newsletters will essentially provide you with a list of penny stocks worth your attention. They will be shares of companies with a great upside potential. Perhaps the best time to get started with penny stocks is right now. Call the company you are interested in and get a feel of the products and services they offer. It is important to believe in a company you invest money in. Whatever you do, do not neglect researching all the aspects of the company, comparing what you see with the other investment options you have.

Protecting Yourself

Protecting yourself

Trading in penny stocks is a lot like playing a game of chance only that you can influence the outcome of your investment by making sure you are investing money in something worthwhile. When you start trading with shares of relatively unknown and undiscovered companies never go overboard with your investment. As far as possible, keep your investment low until you are ready to take the game to the next level. Never invest all the money you have in a single stock and when you do choose to invest in one particular company, make sure that you have pretty good reasons to feel that the shares of the company will pick up soon enough.

One important thing when dealing with penny stock picks is being honest with yourself. You don’t need to be honest with your wife or your friends but you do need to be hones with yourself. Don’t lie to yourself. If you can’t or you don’t know how to narrow down on the top penny stocks out there, then get help or give up on trading with the shares altogether. In general, subscribing for a professional newsletter helps a lot of people investing in profitable markets and companies. As far as you can, don’t get tempted by things such as free advice on investing in stocks. Information given out for free can’t possibly be worth a lot. Last but not least, never forget the golden rule of the world of business. If something sounds too good to be true, then it most probably is. Have your wits about you all the time.

What an Investor should never do

Investor

Penny stock traders run a lot of risks but perhaps the single biggest risk is for them to go for free penny stock picks. Free penny stock picks usually come by phone or by mail, sometimes even by fax. Never buy shares that you came to know about through an unsolicited e-mail or phone call. In addition to that, unless you’ve got money to blow, don’t transform free penny stock newsletters into your bible. Free newsletters are structured to mislead people about the upside potentials of companies in danger of bankruptcy or solvation. So in summary here, to make sure that you don’t land on a rubbish list of penny stocks, don’t rely on things such as free newsletters, e-mail spam, promotional web sites, and fax services to find penny stocks to watch out for.

As a general rule, the more you pay for a newsletter, the better the content is guaranteed to be but then again, don’t go crazy about the amount of money you spend on newsletters. To make sure that you are in association with a good service for penny stock picks, make a note of their phone number. Never go for a service that does not offer a free trial period. All the best services are known to do just that.

The other penny Stock Risks you want to know about

Stock Risk

Hot penny stocks are not impossible to find but then again, there are quite a few things that can go wrong when an individual takes it up to himself to look for penny stocks to watch and follow. In addition to the single biggest risk for penny stock traders, there exist a number of other pitfalls that you might want to watch out for. The dangers are not hard to spot so just be on the lookout for them.


Low visibility

If a company does not provide regular financial reports then you are most probably not going to make it far by buying its shares. As far as you can, go for trading in the top penny stocks listed on the premiere exchanges such as National and AMEX.


Low tradability

Companies with a low rate of tradability demonstrate that not many investors see a lot of upside potential in them. To make sure that you only invest in the best penny stocks, focus on the higher volume shares. Ideally, you should go for companies that trade at least 20,000 shares a day.


Stock Hype

Watch out for stock hype. Never invest in a company you only heard of because it is popular in the market. Do your own thorough research and reach to your own conclusions. Soliciting professional advice is recommended.

Narrowing down on the Best Penny Stocks

Best Penny

When it comes to penny stocks, there is a need for you to look into every aspect of the company you are interested in. From understanding how the company makes money to analyzing what the legal entity has in store for the future, you need to get a feel about everything. In general, to speed up the whole process of finding shares that are worth buying, many people go for professional advice.

Using a professional is of course not for everyone but it is a recommended course of action if you are new to the whole concept of trading in the shares of relatively unknown companies. When narrowing down on the best penny stocks to watch out for, it is recommended that you look for a few markers including the trading volume of the company, its business plans and results, the trends of the legal entity and the opinions of the professionals.

About True Penny Stocks

Real Penny

Currently, perhaps hundreds of websites exist offering investment reports and picks but most of these websites only focus on helping people select particular shares that are worth investing in. At Truepenny Stocks, we offer comprehensive and impartial advice for investors interested in penny stocks using market-driven research and clearly defined selection techniques. We are here to help you become a better investor and to some extent, we provide you with the resources you need to do your own penny stock research. To make the most of what we have to offer, simply sign up for our newsletter at the top of this page.

Penny Stock Secrets

There is no True penny stock secret except for the hard work that we have put into developing our special penny stock scanners. There is no penny stock robot or penny stock prophet. There are many other websites out there claiming to have secrets or special formulas. The Trueity is they are trying to sucker you into spending money on their programs.

Our site will always remain free. What makes our alert picks so much better than the others?

  • 9 out of our last 10 picks rose
  • 7 analysts working full time to pick winners
  • Combined experience of 30 years in the markets
  • Results always delivered to your mailbox

What is a Penny Stock?

In the United States of America, a penny stock, also known as a micro cap equity, refers to a share in a company which trades for less than $5.00. While this is the official definition, and is used by the US Securities and Exchange Commission, generally every full service or discount broker, and the vast majority of analysts and institutional investors, there are informal (but paradoxically less inclusive) criteria applied by the general public and most retail investors. In other countries the term may be used differently, without reference to US institutions. 

As well, there are many limitations with the alternative definitions, as they often contradict themselves. For example, there are many companies trading for only a few cents with market capitalizations of hundreds of millions of dollars, or corporations trading on the Pink Sheets but having share prices of $50 or more. .

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