When an individual decides to become a trader, there are various methods and options he can choose. For example, penny stock trading, forex trading and ordinary shares trading. Depending upon the choice of trading, future varies. In any way, it is uncertain though. The economic policies, government policies, socio-economic factors and company policies that trade their stocks play big roles in determining the future. Nevertheless the stock market keeps on changing on daily basis and there is not a single day that is not without ups or downs. The rest is left to the investors on determining the right strategy to invest in the market and react accordingly. This article specifically focuses on penny stocks. Many people wonder if investing in the penny stocks could be their answer to becoming a millionaires and I personally have been asked this question a number of times. Many investors trading in penny stocks are now realizing that perhaps it might not be their best option of earning millions in the long run. So here is what we think about the future of penny stocks.

1. Bright future –To steer clear from all issues, the future of penny stocks is not dull. It is certainly not going to finish at any time. New companies keep on getting established and always in the need to liquidating themselves by getting more cash, especially young and growing firms. As a result the only option left for these companies is to issue penny stocks due to high costs of raising funds from ordinary shares in the main stock exchange of their respective cities, countries. The fact I that the penny stock investing market is volatile and changing too, but the ones that are adept enough to earn good amount of money with minimum losses are only those that understand the market, know where it is heading and make the right strategy accordingly. With that being said, no need to worry at all regarding the future of penny stocks as it is always going to be there no matter what happens.

2. Buy low, sell high – In fact it is a great time to buy penny stocks right now because the stocks are available at nearly half the actual price. This gives a good chance to a potentially wise investor to earn good sums of money when conditions improve in the future and stocks start rising. Currently the consumer confidence has dropped due to which many penny stocks also dropped their financial values. It takes time to restore investor confidence so that the stocks start rising. So, consider this situation as a lucrative opportunity to earn good amount of money in the long run.

Keep in mind that one trait of successful investors is that they always watch the market trends, control their emotions and play safe. If the stocks rise, clever investors do not get over-excited and similarly if the opposite happens, these people do not start blaming the companies for it. Investment in any field requires time, dedication and efforts that do not come overnight. It require a high level of patience and a lot of time to achieve success and successful investors once in their lifetime might have also incurred huge losses too.

The future of penny stocks is definitely bright, but just as a reminder you have to be very careful in understanding the market trends and taking decisions accordingly. If you think you lack intellectual skills as a professional trader, hire a stock analyst or a portfolio manager at reasonable rates. At least this way you can save yourself from big losses in the run. With the expert advices of professional and trained penny stock analysts by your side, taking decisions should not be a very hard task for you

Penny stocks are classified into different categories depending upon the time and the nature of their issuance. We need to put our message across to inform our readers for the different kinds of stocks available that could be traded as penny stocks.

1. New issues – Usually these are those penny stocks that are issued by companies that are recently young and new in the stock market. Firms that recently joined the stock market and looking to expand their capitals for investment in bigger projects, do not wait, and start issuing penny stocks. Some companies that you see as big giants nowadays might have in fact just started out issuing penny stocks at some point in time when they were just starting up.

2. Recovery shares – Who has not, in the entire world, especially in the US, with the collapse of Lehman Brothers and many multinational banks and companies have felt a pinch on their pockets due to the recent recession of 2008? Many companies have gone bankrupt that once were healthily listed in the top fortune companies. Who knew that an energy giant like Enron, and an investment firm like Lehman brothers with strong financial standings for decades would eventually disappear leaving thousands of jobless claiming for benefits? Many companies even though they have not gone bankrupt but witnessed a significant drop fall in their earnings that forced them to cut layers of people working for them. These companies now issue penny stocks that fall in the category of recovery shares to recover from recessionary effects of lower revenues. Shell companies are categorized as those firms having virtually no management structure and issuing recovery shares for the financial healings of themselves.

3. Defensive Shares – As the term implies, these penny stocks are those shares that tend to absorb the recessionary effects in times of recession and hard economic conditions. These are usually issued by those companies that withstand the booms and bangs of economic cycles with their products and services enjoyed throughout the years. Usually those firms dealing in fast moving consumer goods like food and beverage issue such types of shares having low level of risk associated with them.

4. Cyclical stocks – Now these are exactly the opposite of defensive shares. Unlike defensive stocks, these tend to vary in accordance with the economic cycle of the country. These shares would steadily change as the economic cycle changes. The best time for investment in cyclical penny stocks is during recessionary period when these stocks show huge potential of generating good income in the long run. Usually firms issuing these types of penny stocks are in the industry of transportation that prosper in times of booms and decline during recession.

Given the 4 most important and common types of penny stocks listed above, it is up to your discretion to invest the right way only after consulting a reputable financial advisor to earn a stable living in this field. This way you would get to know that right stocks that could earn you high profits with less risk. Keep in mind though that no matter how experienced or successful you are, losses are bound to happen without a doubt. It is up to you that you tackle these situations wisely so that you can minimize your chances of losses.

Penny stock trading is a risky investment and as Warren Buffet once said, “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1″. Good luck!

Penny stocks are low-priced stocks that are usually issued by new, young and growing companies to get the finance for growth to become the next giant Microsofts, IBMS, Apples and many other companies. AIM is an acronym for Alternative Investment Market and is the secondary stock market in the United Kingdom that offers companies to get listing with minimum requirements at flexible terms, which otherwise would not have been possible getting listed at the main stock exchange market.

AIM is perhaps, one of the world’s most favourite place for young and newly growing companies to issues penny stocks and raise funds that could not have been possible with big listing requirements at the London Stock Exchange. AIM started back in 1995 and over the course of 16 years, attracted well over 3,000 firms from different established niches to raise funds. The companies listed at AIM stock exchange are usually entitled to several tax benefits and relaxed terms of raising finances through the public.

There is a big difference in the listing requirements of AIM and LSE. LSE requires a certain level of minimum market capitalization along with having at least 25% of shares held by the public to be eligible to get registered and continue that registration. Moreover only those companies having a successful 3 year minimum past trading record would be registered. If we do a comparison of both markets, AIM does not have strict quality criteria for listing.

AIM is home to over 65 billion GBP of accumulated funding raised by growing companies from 1995 to 2010. Out of these, 20% of the companies are from oversees. Combined, well over 40 sectors make up the unique structure of AIM.

The listing requirements do not require minimum market capitalization, past trading records, and level of shares to be held by the public. The company is free to select as many people as it wants from the public to give ownership to in the form of penny stocks and low cap shares as deemed appropriate. One of the toughest requirements for the admission though is that the company needs to establish a strong PR with the public. That means that company’s sales growth, and other strategies must be clearly and honestly defined to the media, the shareholders and the general public to maintain high level of portfolio and reputation in the market.

In order to be eligible for listing, the company must appoint and maintain a reputed nominated adviser at all times and these responsibilities are set out in the respective AIM rules for Nominated advisers. It is compulsory for all companies to have a nominated adviser with them at all times, failing which could result to temporary suspension of trading securities on the floor and even leading to permanent exclusion (cancellation) from AIM.

Ideally companies join Aim specifically to raise funds on small shares for growing companies that want to become the future giants. This process also involves developing a long term relationship with the key customers and suppliers so that the business remains liquid enough to continue its business operations.

Investors highly regard independent research to determine the company’s financial strengths and weaknesses. This is the most preferred method of investors and one that is virtually free from mistakes or bias. Those companies having independent research are likely to incur fewer losses and gain more momentum and speed in raising funds for their business operations.

What are Penny Stocks?

Penny Stocks trading has become perhaps one of the most lucrative options of making money by investing funds in shares of different companies on a long term basis. As a result, many new branches of stock trading have emerged up out of which penny stock trading holds a great amount of importance. Before moving on describing penny trading in details, we first need to know its definition.
As the term defines it, penny stocks are those stocks that are traded for less than $1/£1. That means, any stock having a price of less than $1/£1 is automatically categorized as penny stock. These stocks are backed with high levels of risk in investment with relatively lower amount of capital and expertise required than trading normal shares of companies. Many people are in the craze of becoming millionaires by investing in penny stocks but in order to be a successful one, there needs to be clear and efficient evaluation of these stocks to learn the ins and outs of trading.
These stocks are not traded in the stock market, unlike the standard shares of companies, but over the counter or at the OTC market. However their functioning of trading is not very different from that of ordinary shares. You still have to hire a broker for all types of trading activities related to buying and selling these shares to earn profit on them.
Stock trading has allowed many investors to open new doors of investment and money earning opportunities in this field with penny trading as a lucrative one. However, before indulging in this trade, the stock investor needs to be certain to gain enough knowledge and start from the lowest possible investments to avoid losses.
Since these are extremely sensitive stocks that can fluctuate as much as 50 to 80% at a single time, many long term investors and financial advisors seem to avoid these. The ‘get rich quick’ scheme just does not work anymore and most of the times these stocks are used to trick many investors by con artists to get the precious investments of short term speculators destroyed in seconds.
Usually penny stocks are issued only by those companies that are small in capitalization, paralleled with high volatility & speculative shares. This makes the trading either very successful or a big failure for the investor. These companies are not listed in according to the requirements of the stock exchange as ordinary companies are. These firms usually get registered with limited capital and minimum listing requirements.
Penny stocks have historically been rated as top favourites for many people but only by those having a successful stream of stable income in the long run. But, that in no way guarantees certain performance of the same in the long run. Many investors make silly mistakes of directly investing in these shares instead of first spending some good amount of time researching them and then choosing the stock wisely. This eventually leads to failures and frustrations in the long run. You certainly, in any way do not want to fall in the category of these people. As a result, ask a financial expert and then move on with the decision to lower the amount of risk associated with them.
In a nutshell, penny stock trading is trading in stocks with a price less than $1/£1. Some websites and financial advisory firms categorize even those stocks with less than $5 per share value as penny stocks too. Whatever the definition be, the investor has to open his eyes and ears to steer clear of any thoughts and should take responsibility of losing money in case the stocks turn out to be issued by fraudulent companies.

Glossary

Penny Share related words in simple A-Z terms.

AIM: Known as the Alternative Investment Market, the AIM is one of the stock markets within the United Kingdom that includes penny share companies. The AIM is perhaps the best market to pick up penny shares from newly listed companies, simply because it does not have as stringent protocols regarding listing as the London Stock Exchange (LSE) does.

Blue-chip shares: This is a phrase which refers to shares in companies that are typically stable and are generally long-term rather than short-term investments. People looking for ‘safe’ investments will tend to buy into blue-chip companies rather than the more riskier investments such as penny shares.

Cyclical shares: A term that describes shares that regularly rise and fall in value. The cycle is usually reliant upon political, environmental or economical factors, but may be effected by season (such as with companies involved in tourism and retail).

Defensive shares: A term that describes shares that do well in bad economical conditions. These shares typically belong to companies that provide necessary goods or services, such as food, water, electricity and gas. As the overall market value falls, these shares can be expected to remain stable or even increase in value.

Dividend Yield:When people invest in shares in a company or in other forms of stock, they are investing in the stock market. Investments pay yearly or twice yearly dividends depending on how the investment is doing.

EPS: In the stock market and penny shares investment business the term EPS refers to the earnings per share, i.e. how much each share earns. The EPS is the amount that a company allocates from its profits to the outstanding common shares.

EPS Growth: EPS growth is another stock investment term which is largely self explanatory, i.e. the forecast growth in the earnings of shares.For individuals and companies that invest in shares the EPS growth or the growth in earnings per share is the annual calculation of the estimated growth in earnings per share.

FTSE:The sole provider of market indices in UK, the FTSE group is a British institution, and has equivalents in the Dow Jones in the US, and the CAC 40 in France.

LSE: Otherwise known as the London Stock Exchange, the LSE is the most respected stock exchange in the United Kingdom. Although it is difficult for new companies to be listed on the LSE (the Exchange has guidelines that prevent listed companies with less than three years public history from being included), the London Stock Exchange is an ideal place to find recovery penny shares.

Margin: In the stock market margin can refer to a number of things such as margin of profit and buying on margin. This definition refers to the most used term of buying on margin, which is common practice for some investors.

Market capitalization (market cap): The term ‘market capitalization’ or ‘market cap’ is one that many investors use frequently. It refers to the agreed value of the company’s equity. Small or young companies tend to have less assets and less value; these are the companies which usually have a low market cap and which subsequently have low share prices. Market cap is one of the factors which determines whether a company’s shares can be classified as being penny shares.

Microcap: This is a term which refers to companies with a market cap of less than £100 million. It is interchangeable with the ‘small-cap’ classification. Microcap and small-cap companies generally have penny share prices.

Off-Ex: Otherwise known as the Off Exchange, the Off-Ex was the old name for the market now known as PLUS (sometimes just Plus). The Off-Ex was somewhat of an unofficial stock market which provided a step-up for small or newly public companies. Small enterprises and experimental industries were amongst the types of companies listed on the Off-Ex.

P/E Ratio: In the stock market, the price to earnings ratio of a stock that is being sold is known as the P/E ratio. The P/E ratio is the way the price of a share is measured in relation to the net income from the share that a company earns in a given year.

PEG Ratio: In the stock market’s = investment terms the peg ratio refers to the price/earnings to growth ratio that determines what the trade off might be between what the stock earns the price of the stock that comes from each share and the expected level of growth for the company.

Public domain: This is a general term which refers to shares that are available to or owned by the public; in other words, the shares are not owned by the company executives or employees. The London Stock Exchange will only list companies which have at least 25% of their shares in the public domain.

Small-cap: Interchangeable with ‘microcap’, the term ‘small-cap’ refers to companies with a market capitalization of less than £100 million.

Spread Betting: Through the ever-increasing portal that is online gaming, these transactions are becoming more popular. Prospective punters now can place a bet from the comfort of their own home, which has seen the value of the industry rise to a reported £12 Billion!

A good penny stock to watch I believe is Victoria Oil and Gas.

I’d like to talk about fallen AIM star Victoria Oil and Gas (LSE: VOG), and its future as a potential mid cap Oil and Gas company. In 2006 this penny share peaked at around 260p and was flying, it is currently sitting now at just over 4pence a share (July 2011). Yes, this penny share went from 260p to a low of around 2.6p in a couple of years, but can it do the reverse?

So what does the future hold?

In May 2011 it was announced that VOG had been awarded a 25 year exploitation licence for the Logbaba gas field (located in Cameroon), with a potential extention for a further 10 years.

With a large stake in this field (95%, up from 57% due to a breakdown with RSM production) and with gas sales predicted to start Q4 2011 the future is quite bright indeed. So far there are 11 commercial customers signed up at a contracted price of $16 btu, the outlook is bullish with an expected rise in share price to come in-line with profits from the gas sales.

The real company maker however, I believe will be the West Medvezhye field, which is located in one of the most prolific oil & gas areas in the world. A recent RNS update shed some light on VOG’s future there, a few key points are:

An Estimated 400 million barrels of oil equivalent (mmboe) in-place in six features mapped by passive seismic and gas tomography surveys,

Reprocessing of 845 km of 2D seismic is complete and geophysical/geological modelling underway

Development studies in progress to commercialise the Well-103 discovery and prospective resources

Drilling is planned for Q4 2012

So it’s all great, right? Well, there are still a few doubts as to whether there is going to be a dilution or not in the near future to fund the completion of the pipe laying.
A recent FT.com article reads:

Victoria Oil & Gas, the Aim-quoted company with assets in west Africa, Russia and Kazakhstan, endured a turbulent week in Cameroon, as the name of its local subsidiary Rodeo Development might suggest.

Shares fell 4 per cent to a low of 4p on Wednesday after the company served an eviction notice to its private partner, RSM Production Corporation, who had failed to pay its share of $7m in agreed development costs for the Logbaba gas field in Douala.

However, shares recovered nearly 9 per cent by the end of the week after management insisted it had the funds to complete the onshore project, targeting proven and probable gas reserves equivalent to 35.3m barrels of oil, in time for projected first gas in Q4 this year. That will involve some re-routing of funds originally intended to develop its potentially larger Asia assets and there is speculation the company will tap the markets for more capex early next year. By then VOG hopes gas production will boost cash-flow. Expect more volatility ahead.

There are many bumps in the road for this penny share I am sure. Possible delays in laying down the pipe and meeting their estimated Q4 gas sales, potential dilution, global uncertainty, problems with the Eurozone, all key issues that come into play. I believe the foundations of this company are solid and with a good BOD headed by Kevin Foo I certainly believe that this is one to watch, especially for long term holders.

As with all penny stocks the investor has to proceed with caution, the above is just an account of my feelings for this share, as always you should do your own research.

Penny stocks to watch

The recent economic crisis has taught us a few new fundamentals. First of all, big companies fail in a massive way. In today’s complex economy, investors can’t just put funds into large companies with long histories of financial success. The devastating failure of Lehman Brothers proved the importance of alert investing. Penny shares can provide and alternative investment.

Additionally, small businesses are the primary engine of economic recovery. If our economy is to experience a return to prosperity, new businesses need working capital to finance innovations. When you invest in penny shares, you are often backing smaller companies with new ideas. Since there is no requirement for a large investment, people are free to put smaller sums of currency to work. Modern investors know that savvy businessmen vote with their currency. With an investment in penny shares, you are casting a vote for small business over the established class of too-big-to-fail corporations.

Making Serious Money with Penny Stocks

Serious investors have generated handsome returns on penny stocks. While some smaller companies do not grow into financial titans, penny share picks often emerge as successful businesses. Since some of these new businesses grow very quickly, investors can realize significant capital gains in the blink of an eye.

There are always risks involved in any investment. However, you can invest in penny shares while limiting your exposure to losses. With such an inexpensive investment, poor performance from stocks causes less harm to your overall portfolio. When one of your penny share picks grows into an industry giant, you will experience dramatic gains.

Penny Shares Are Not Just for the Wealthy

The extraordinarily wealthy have protected their assets with investments throughout modern history. However, wealth protection is important for people from all economic backgrounds. Record low interest rates cause common savings accounts to fall behind the rate of inflation. As a result, your money loses buying power over time. The best way to prevent this is to invest in small businesses that will deliver returns during prosperous times. This allows investors to grow their money ahead of changes to the monetary base.

Since penny shares are affordable for nearly anyone, you can put extra money into small businesses that will create economic prosperity for the unemployed. You are free to invest small amounts of extra money at convenient times.

Some investors have made a career by following penny stocks. When compared to the weekly grind experienced by most, penny stock investors enjoy the thrill of using unconventional tactics to provide working capital to small businesses. It is fun and exciting to watch your penny share picks grow into true engines of prosperity.

Getting Started

Blind investment is unwise. When you are looking to join in the fun, reliable advice from experienced investors is important. With so many penny stocks available, novice investors need help from those that deal with the market on a daily basis.

Additionally, you want to decide how much money to invest. Penny stocks are best purchased with extra money. Your capital is to be considered a seed that needs time to grow into a tree of prosperity. Since investment involves risk, it is important to determine an acceptable level of exposure.

When you are ready to help the economy and invest in penny stocks, a plan must be devised. Since so many companies are competing for your capital, experts offer penny share tips to narrow down your selections. The authors of this blog have kept a close eye on the available sources and resources giving their advise on penny stocks and one of the best we have seen is the free email newsletter from GS, click here to sign up for it now and receive valuable tips about breaking investment opportunities.

This is a little light hearted and not in line with the usual postings on here but since its my birthday I thought I would lighten the mood a little before getting more serious with an increase in the number of posts and some recommendations. Enjoy!

Stories of penny stock fortunes abound. Most of us have heard the tale of Aunt Betsy, who bought Intel at 3 pounds a share, or Uncle Herbert, who got in on the ground level of AT&T. We know that the stock market has made millionaires. But still, we think, penny stocks are not for us – or are they. Use your imagination for a moment, and consider the possibilities.

A gift from Grandma

The 1980s have just begun. You graduated high school, and as a gift, Grandma gave you 400 pounds in Wal-Mart shares, telling you that she is helping you to build your penny stock fortunes. You thank Grandma profusely for her generous gift. Later, you ask your dad what the stock market even is, and what you are supposed to do with 5455 “penny” shares of some company that you never heard of. Dad tells you that this is an up and coming retailer in the United States and that someday it may be worth a lot of money – and no you cannot sell the shares now to buy a car. Whatever. You put the stock paper aside, and go listen to the new Stones album. Years go by, and you are far too busy to care about stocks.

Fifteen years later, you are done with college, working, and engaged to that special someone. At the wedding, Grandma gives you an envelope; inside is 400 pounds worth of shares in a company called Dollar Tree. Ah, another company you never heard of, but it reminds you of those other shares she gave you years ago. You’ll have to look into those. But now, it is time for that wedding dance to the latest Madonna song.

What ever happened to those stocks?

A few more years go by. You and your spouse have had a baby, and while money is always tight, life is generally good. Of course, more money would be better, but you can only work so hard. One day, you are cleaning out your office, making room for that new computer that is supposed to be Y2K proof. As you sort through some papers, you come across that old Wal-Mart stock. You pause, and think about how friends of your have mentioned the stock market, and of course now you know that Wal-Mart is a huge conglomerate – you wonder if they are worth much. You might as well look at those wedding stocks too, so you get both pieces of paper together, and look them up. You aren’t too excited – Grandma only gave you 800 pounds worth of stocks, but hey, they may be worth a few thousand now, and that could help with the baby.

You finish hooking up your new computer, and get online to check out these stocks. Almost instantly, your face goes white. Your hands are almost shaking. You call your spouse in, because you must be looking at this wrong. Nope, you are right. Those Wal-Mart shares, well Grandma paid .07 pounds a share in 1980. Now, it sells for 45.23 pounds – your shares are now worth 246,744 pounds! And those Dollar Tree stocks are now worth 5,156 pounds, after just five years. Grandma’s gifts to you started as 800 pounds, and are now worth a total of almost 252,000 pounds. Grandma built you a penny stock fortune, while you were not even paying attention.

A penny stock fortune

Now, imagine for a moment, that you used most of that to pay cash for a new house, but kept 50,000 in a savings. A few more years have gone by. Now, it’s the financial crisis of 2008, and things look bad for the big banks. You decide to invest your 50,000 pounds of that money you earned from Grandma’s penny stocks into a single bank stock, that is valued at pennies, but which you (and Grandma, of course) feel confident will recover. You wait a few years, and now, they have rebounded from .50 a stock to 35.50 a stock. That stock is now worth three and a half million pounds! You are not even 50 years old, and you are rich. You and your family have secured your penny stock fortunes, and you can now retire, living life on easy street.

The reality of penny stocks

The above scenario is, of course, a fantasy. Or is it? Is it an urban legend that Aunt Betsy is rich? No, she really did buy Intel at three pounds, and has been living the good life ever since. Of course, not every stock is going to make you a multi millionaire, but it does happen. Many penny stocks are simply stocks low in their value cycle, and bound to skyrocket. Investing just a few thousand pounds, can result in tens of thousands in return, and investment return like no other.

A well placed penny stock purchase can pay off over many years, and sometimes in just a few years.

Penny stock trading has become a lucrative arena for those looking to broaden their income by investing in high risk shares traded less than $1 per stock. Whatever the reason be, never forget to consider the most important tips mentioned herein to avoid falling a victim of fraudulent and con artists that are on the run to get every penny out of your pocket. Here are some of them that you need to consider to avoid frauds:

1. Low trading volume of penny stocks – Those companies that usually do not have a high volume of penny stocks to raise capitals, do not seem to get interested for long term financing. As a result it becomes exceptionally difficult to trade in low volumes because no visible trading pattern can be defined without company’s active indulgence into the trading matters. Be aware as these types of penny stocks could be the perfect choice for fraudsters and con artists to rip you off your precious hard-earned money.

2. Penny Stock Over the phone salesman – Never, in any way, under any circumstance give positive response to over the phone salesmen that call you up and give you an opportunity to trade in penny stocks for a high volume of profits and revenues. Most of the times, these people are liars and professionals in ripping you off your investments. These people have zero credibility but are experts in convincing the potential investor to fall in their traps. These salesmen are exceptionally trained with provable arguments that could trick any layman in believing them. Avoid them at all costs and no matter how convincing they get, just ignore them and hang up the phone. Just think about it, would reliable companies used cheap methods of calling up potential investors to invest in their penny stocks? Never! So you should always resort to avoid these scammers.

3. Guaranteed high performance – Many penny stocks provide 100% guarantee to go up. But, what these scammers do not tell you is that these stocks also fall with the same speed as they rise and are certainly to do so. There is no certainty for any penny stock for a guaranteed up or a guaranteed down. If someone promises you guaranteed returns on stocks, never fall into their trap. Instead, check for yourself on how reliable the company is by analyzing its past historical trading records and noticing the ups and downs in the stock. If you feel confident about it, then you can proceed with investment.

4. Penny stocks with zero commission – There is no such thing as a free lunch in this world, dear potential investor/reader. So, avoid it at all costs. Even if you have heard of the term “Commission free penny stocks available!” it might be possible you heard it directly over the company. Whatever the source be, you have to be certain that companies DO charge commission that usually does not get noticed by a layman. These are in terms of service charges, or hidden costs included in stock fees but not disclosed to attract the new investor.

5. The hottest penny stock – Professional scammers in the field of stock market are wise enough to widely fluctuate the prices of their stocks crossing the roof. These are those people that spread and flourish a rumor based upon disinformation released by the company to inflate the stock price as the rumor spreads from person to person over the entire trading floor and one that eventually becomes public. If you ever heard someone saying “Invest now, hottest penny stock for guaranteed returns”, then get away from it. Do not risk losing all of your money by these people.

Penny shares present an exciting opportunity for the adventurous investor. While any stock can go up in value, penny shares begin so low, that their opportunity for growth is boundless. Fortunes have been made in penny shares, and your fortune could be just one stock purchase away. Just a few hundred dollars invested in a penny stock can net thousands, tens of thousands, even hundreds of thousands in the end, for the savvy, and somewhat lucky, investor.

Despite their allure and the penny share tips you will find, no one can guarantee that any penny share will soar in value, and thus every investment is a risk. Choosing the right penny stock is a matter of knowledge, comfort level, and gut feeling. While there are many online sites looking to provide tips on which penny stocks have a huge future ahead of them, it is important that you carefully consider the risks before investing, and know a bit about whom it is that you are taking advice from.

Use caution when seeking advice

Stock selling websites and companies fill the Internet, all seeking to provide you with advice and tips, particularly in purchasing penny share. The Internet is certainly an excellent source of information to help educate your stock buying decision, but you also need to be careful. Whenever investing money, it is important to use a keen eye to vet exactly who is providing you with tips and information, and what their motivations might be – this is particularly important in an area of such high volatility. Unfortunately, many people peddling penny stock advice are either lacking in knowledge, or worse, intentionally malicious, out to steer you towards stocks that they have some stake in, or are being paid to promote, rather than stocks that truly have some type of future.

Before you take advice on what penny stocks are the next hot buy, turn a critical eye towards the company you are considering listening to. Read their website carefully, looking at who their company is, their mission, and their policies. Try to determine what their motivations and affiliations are, and who runs them. Often, simply reading the “About Us” page will tell you all that you need to know to determine a company’s motivations for offering you information.

Make your own decision

While many websites offering advice on stock purchases should be viewed with a skeptic eye, others can be very helpful. Websites that offer historical information on companies, or financial reports and outlooks, are often quite helpful in looking at past trends, and deciding for yourself what companies simply look good. Other sites offer free suggestions for penny shares that could be on the rise. Usually these are small sites, run by stock enthusiasts who honestly enjoy researching stocks and sharing their knowledge – it is these types of free penny share suggestion lists that are a great place to begin your search for the perfect penny stock.

This website is not affiliated with any company and not run by novices, while anyone could say that in the somewhat anonymous world of the Internet if you take the time to read around this site you will find a wealth of useful information and will notice that we do not openly publish “picks” only general advice. This might not be the “quick win” that many people are hoping for certainly required more work, however, by following it, you are much less likely to crash and burn.

One resource I am personally quite fond of that does provide some useful penny share tips is the small caps newsletter, I am not sure how much longer they will be taking new signups or if they will still be accepting new subscribers at the time of reading but if you click here you will be taken to where the signup form was at the time of publishing this post. Remember the advice above, don’t act on the first newsletter that they send you, allow yourself time to digest the information and review it over time, you will be impressed.