The Right Way To Start Trading In Penny Stocks
Intro to Penny stocks : Penny stocks are low priced hopeful stocks and these stocks are traded in over the counter ( OTC ) market. As per SEC ( The SEC Commission of US ) the maximum cost of the penny stocks is fixed at $5.0 per share and in real the cost of these stocks are significantly under and often a mare one cent. Though the penny stocks are ordinarily traded in the over the counter market, however these may also be traded at NYSE or Naz .
The right way to start to trade penny stocks : though it’s a widely held belief the penny stocks are dodgy but at the very same time as the share costs are often low, the danger connected with penny stocks is also minimum. Many folks see making an investment in penny stocks as a possibility to learn share-trading methods and simultaneously not all penny stocks are dangerous. Though the investment in penny stocks may not significantly enhance your fiscal condition, but the chosen penny stocks may give you some profit.
If you made your intellect to invest a bit of money in penny stocks, you’re going to have to approach a trader or dealer for getting started. As per SEC ( SEC Commission of US ) rules you have got to give a written request to the broker and after approval you can buy the stock from the broker. You should consult the trader and should invest fastidiously. Your broker will tell you the rate of the stock and brokerage.
Before making an investment in penny stocks contact to the Instruments division of your state and get info regarding the broker. The history of broker provides crucial info about the license and disciplinary actions taken against the broker.
After you have decided to cope with a broker, get all of the info referring to the penny stocks, brokerage and other T&Cs in writing from the broker. You should also keep the records of all of the written documents provided to you by your broker. You need to ask your broker to give you the written documents discussing the advice for purchasing or selling of any penny stocks. You must also take an independent opinion of the penny stocks from another broker and decide judiciously before making any investment. Your broker should also give you an once a month statement discussing the penny stocks held by you in your account and the rates of the penny stocks.
SIPC Coverage : brokers dealing in penny stocks will probably have SIPC ( Instruments Financier Protection Establishment ) coverage. If the brokerage firm can’t pay you your dues due to insolvency, the SIPC makes sure that the purchaser owned penny stocks held by the agents are paid. SIPC insures the whole purchaser owned securities held by the agent, however in the event of crime, the insurer isn’t responsible to pay the amount.
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