What are Penny Stocks?

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) December 26, 2009 -- What are Penny Stocks?

A common stock that trades for less than five dollars a share is defined as a penny stock. These shares are almost always issued by small companies to finance their development plans. The terms penny stock, microcap stock, small cap, and nano caps are sometimes all used interchangeably.

Characteristics of A Penny Stock

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What are Penny Stocks?

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Penny stocks are high risk investments with perceived potential for rapid growth. Comparing to other big established company where one would be lucky to see a growth of 10-15% gain, penny stocks can see a gain of 100-500% in a very short period of time.

Most penny stocks are traded in the over the-counter (OTC) and Pink Sheet market. Those meeting the compliance and regulations are also traded in national securities exchanges such as the New York Stock Exchange, the American Stock Exchange, the Canadian Venture Exchange, etc. The number of shares traded (volume) and the price information on exchange-listed stocks and certain OTC stocks is continuously collected and reported to the public.

NASDQ , AMEX, are probably the most secured places to invest in penny stocks. Investors will have access to all the companies’ financial information. Trading liquidity if the stocks invested here are pretty good, meaning there is a good chance for the stocks of these penny stocks to be converted into cash.

Penny stocks that are traded on OTC and pink sheets are not under any kind of regulations. These stocks could be brought through a phone salesman or directly form the company or by any other means that a stock could be purchased. Trading activity of these stocks are uneven, moreover their trading liquidity is absolutely zero. This means that the penny stocks invested in OTC and pink sheets are easy to buy but almost impossible to sell.

At StockExploder.com we spent days, and sometimes weeks researching companies before we release our penny stocks alerts. We maintain notes of all the internet message boards by various brokerage firms to detect any kind of manipulation done to the stock price. WE strive to provide our subscribers the information and source accurately about the penny-stock companies in a timely manner which could be the difference of getting a genuine stock or other illegal schemes of fraudsters.

We also continue to follow our alerts, and will send penny stock updates if necessary. Moreover any further details such recent financial statements of the penny stock company could be provided on further request.

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