Penny Stock is a part of investment system and it came into existence from 19th century. These stocks are nano stocks with the price of one share ranging between 10 cents to 5 dollar. There are many people who have actually made money through penny stock trading. These shares are owned by companies having small investment on major stock exchanges. They can get large growth over the small rated investments, but beware of pump and dump schemes associated with these stocks. Penny stocks are not listed on major stock exchanges and lack proper information for buyers. You need to be aware of OTC stock market or Pink Sheets listings and pick up a penny stock, which can probably give you good returns.
You can make really good money with penny stocks by understanding the business model of the company, their competitors, products/ services demand and the future prospects. There are many companies depending on commodities or the other requirements in generation of products or services. Oil, natural gas, pharma and many other industries are blooming in penny stocks and they involve risk of fraudulent associates. Penny stocks are actually difficult to sell because people fear of losing their money by investing in these companies. There are many Pink Sheet investments having lack of regulations and no reporting guidelines. These companies can generally get manipulations and involve in ‘pump and dump’ schemes. The prices may vary adversely and you can lose your money with the clever actions of counterfeit stock brokers.
Penny stocks are vulnerable to frauds, but you can make the appropriate selection to win the battle against fake stocks. If you tend to purchase stocks of some good companies, there is a probability to earn handsome amounts and get high ROI. Don’t depend on any stock tips and make your own researches to get best returns from penny stock investments.