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Trading and Investing in Penny Stock

by thomaswaugh

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If you buy penny stocks with weak structure this could mean
the loss of your whole investment. There are many ways to check the structure
of a company in the penny stock market but with these smaller companies there
are often hidden issues that are not highlighted in the latest press releases.
The first thing to look for when investing in penny stocks is the share
structure of the company. You will also want to look at the balance sheet of
the company as well as the history of the companies SEC filings. If the company
is a pink sheet stock, then you will have no filings and the process becomes
even more difficult.

Investing in penny stock is one of those professions where
your always on the edge of you seat, I imagine someone in the world feels the
same way. Except we feel this every time we have money in a trade. In this
market, investors can attain huge gains quickly, but they can also lose all
that profit in the blink of an eye. Some who trade in the otcbb market make a
living with this "wild west" style of trading. Others will lose their
trading capital as they make poor choices on stocks.

When investing in the penny stock market, you're buying low
priced shares of a company hoping to make a big splash in the corporate world.
Often these companies have a product or idea that makes sense and investors can
easily see why the future of this company looks bright. In the stock market,
it's not all about products and dreams though. When buying penny stocks you
need to look at the future outlook of the company from a business perspective.

Share structure is a main issue when penny stock investing.
If the stock is at a price you like and you notice that the float (how many
shares are currently being traded in the market) is low this is a great sign.
You are not finished yet though. You must look at the authorized shares (how
many shares the company can add to the float without filing) if the authorized
shares are much larger than the float then the company can add more shares to
the market. This becomes a supply and demand problem. With more supply the
price drops. Sometimes the price will drop dramatically.

When trading these otcbb stocks, you must understand that
the company needs to survive. They will dump the shares into the market to
create capital. When the price becomes to low and the authorized shares are at
the point where they are running out, the company can reverse split. Then you
will lose many of your shares and the process begins again. If you buy penny
stocks, you also want to ensure the company does not have a history of this

At other hand one can get lots of tips about share market
buying and selling by visiting to-:


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