The stocks priced under $2 with low market capitalization are termed as Penny Stocks. These are nano-leveled stocks usually belonging to new companies, bankrupt organizations or sometimes, the fake companies. Yes!! This is the hard truth associated with penny stocks. You should not panic as there are many good and prospective companies having probability to grow and those begin their share distribution with penny stocks.
Market Capitalization is an important term for penny stock brokers. It is determined by the formula:
Market Capitalization = Stock Price of the Company X No. of Outstanding Shares
This calculation will give you the whole value of the company’s shares at a particular time. Penny Stocks are not traded on major stock exchanges, but Over-the-Counter (OTC) bulletin board. There is a broker involved in trading and you will have to give them a small percentage in the form of commission for trading.
Penny Stock transactions are chargeable by brokers and there are many companies giving free stock tips. Don’t just follow them and try to focus on your own decisions to get the right stock investment. Penny stock investments are not too large and you can diversify your investments to get better profits.
Penny Stock investments can be done online through various stock broking companies. You need to open a trading account, which can be loaded with money. The transactions can be made with that account and you can make research over the companies into your consideration. Penny Stocks require higher level of investigation and you can get losses without making right study for stock trading.
Penny Stocks can be really advantageous for many investors. You need to make investments carefully to get profits. Your investment depends on knowing the facts and figures about the company. Make informed investments and they will certainly reap positive results for you.