In the United States of America, penny stock symbols are 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 also use this term penny stocks. 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 penny stocks may be used differently, without reference to US institutions.
While we all dream about investing in the next Microsoft or the Home Depot, and actually mentally start calculating the profits, the sad truth is that the odds of finding out that once in a decade, success stories are slim since these companies are either start-ups or have purchased penny stock rumble a shell company as it was cheaper than an IPO, or they just do not have a business plan that is good enough to justify investment banker’s money for an IPO. This doesn’t make them a bad investment, but it should make you be realistic about the kind of company you are investing in.
When "market making" (matching buyers with sellers) was done strictly by human brokers on the floor of the stock exchange, manipulations and front running were possible but were against the rules, which were strictly enforced. Front running by computer, using complex trading programs, is an entirely different species of fraud. A minor loophole penny stock trading in the system has morphed into a monster. Keiser maintains that computerized front running with HFT has become the principal business of Wall Street and the primary force driving most of the volume on exchanges, contributing not only to a large portion of trading profits but to the manipulation of markets for economic and political ends.
Among the different stock market investment opportunities , one of the darlings of investors is the penny stock. While these small cap stocks stand apart from the rest and present an inviting allure to investors as an opportunity for big returns, it is important identify the true penny stocks for investment. The attractiveness of penny stocks results from the relatively small investment required and the immense potential for return on investment. Given the risk involved in investing in penny stocks, it is essential to correctly identify the hot penny stocks that will beat the market and emerge victorious.
Penny stocks , because they operate under less strenuous filing and listing regulations are prone to fraud. One popular fraud is for an investor to buy large amounts of a stock and then use the chat rooms, blogs, and discussion forums to market the stock as a good buy. Many times, these companies are financially penny stock blog unstable and will fold soon after the stock is bought and sold, leaving some investors with worthless pieces of paper. Companies involved in Initial Public Offerings ( IPOs), have been courting investment Capitol, so they may have more public information about their business and finances available.
http://www.pennystockspy.com