No.1 Article of Penny Stocks
Ask any investor what a stock trading under is and they will tell you it is a penny stock, microcap stock, or nano stock. These three terms are for the most part interchangeable. However the broader definition of a penny stock refers to a business's composition value of its excellent coarse shares, are more ordinarily known as its shop capitalization rather than its stock price. However there is no set term that completely defines a penny stock.
To think the shop capitalization of a firm (the shop cap) you must multiply the stock price of the firm by the whole of shares that are outstanding. By carrying out this calculation you can find out what the total dollar value of all shares in the firm are at any given moment in time. Penny stocks are not traded on a stock replacement like other stocks but they are traded in the over-the-counter (Otc) market. For the trading of most stock an agent will act on the investors profit and dispose a transaction directly between the investor and a third party. The broker then receives a commission for facilitating the trade.
Penny Stocks
A large proportion of all penny transactions are expensed by brokers as principle transactions. This means that the broker is not paid any commission but rather makes its money on the spread, and by buying and selling at advantageous times. There is no particular price at which penny stocks are bought and sold, but rather there are a whole of different prices. The dissimilarity between the bid and ask price is known as the spread. The spread of many penny stocks are usually colse to 25-33% but can often be 50-100% or even more. There are also all the time two bid and two ask prices, these are known as the inside and face bid and ask. Keep in mind that it is the face bid and ask that is of most interest generally. Penny stocks are also branch to mark up pricing. This is where a broker has held the penny stock in its inventory and has therefore taken some of the risk linked with shop price fluctuation.
Although penny stocks are quite involved and there are many problems linked with trading penny stocks as well as millions of dollars of loss, many companies still trade in them because they can help for example, struggling companies just beginning up. The best way of looking a good investment is by consulting with your broker. However in the penny stock shop be very wary of brokers who are only trying to sell and may not have your best interests in mind.
invest In Penny Stocks - How To Buy Penny Stocks Online?
Nice informative blog... This blog nicely explain what is penny stock and how to trade penny stocks online. Thanks for sharing
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