If you are outside of the trading world then it is unlikely that you know fully what penny stocks are. If you speak to different brokers they may give you different answers and you will typically find that they do not cost only a penny, or even pennies to purchase. But they can be lucrative for traders who understand them and know what they are doing.

Here’s a quick, easy burst of information, to help you start to get to grips with penny stocks. Hopefully this will give you some pointers for further exploration and research, rather than a definitive understanding.

Defining Penny Shares

Penny shares are the well known name, for what’s more formally known as a micro cap equity. In its simplest terms, it’s an inexpensive stock, a share which trades at a lower worth than blue chip, high cap items.

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In the United States the SEC define a micro cap equity as a share which trades at a unit value of less than $5.00. That is an official definition, however there are different, looser definitions, which are utilized by investors and penny stock brokers, depending on their place throughout the penny stock market.

In case you are speaking to a broker or investor about penny stocks, they may very well be speaking about shares where the value, per unit, is lower than a fraction of a cent. You might also be taking a look at stocks which are traded on more obscure markets, with caps of $25-$50 million, or less, relying on the definition applied.

Of course, you don’t have to be in the US, to be talking about penny shares, as they’ve parallels, all all over the world, where low-cost stocks and shares operate, in markets that help their trade. Top penny stocks can go on to be big name, blue chip shares, as a company grows and the markets they trade on can change, over time.

Because the definitions used are reasonably versatile, in lots of circumstances you’ll typically discover that there are some contradictions to be found, in the way that these shares are defined. For instance, you may have shares that trade in obscure markets, with high unit costs. Similarly it’s possible you’ll discover companies with high market caps, buying and selling at costs well under $5.00 per share.

What Markets Trade Penny Stocks?

Penny shares may be traded on all kinds of markets. In the United States, this will mean anything from the NYSE and NASDAQ to the OTC-BB and Pink Sheets. Penny Shares are more likely to be found on the OTC-BB and Pink Sheets, because the larger exchanges are likely to concentrate on higher market cap companies.

Small cap shares are usually found where the rules and fees for exchange listing are lower. The Pink Sheets have fewer restrictions than the OTC-BB, so you’ll discover them in greatest numbers there. You’ll discover that some brokers desire to not deal with the Pink Sheets, however you’ll discover loads of OTC-BB Brokers, with a complete record of OTC shares available.

This should be enough to get you started but be aware that trading these shares will take further reading and implementation if you intend to become an active trader. There can of course be a lot of risk involved and you should be following a proven system if you hope to make it work.

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There is no shortage of reviews written by gurus in the penny stock arena, and generally I try to ignore these articles . But I just read an article that made my blood boil: the article concerned Penny Stocks.

As a long time veteran of day trading on both Wall Street and the CME there are very few areas of investing that are infested with more vice, scammers and downright cheating than the penny stock market.

I realize this will get some traders dander up …. and I will supply ample evidence with hard facts and experience ,  not all Penny Stocks are scams…but an overwhelming number of Penny Stocks are simply vehicles for obtaining capital for companies that don’t have a product to sell or a service to offer .

The life of many penny stocks starts as follows:   As you may have noticed , most penny stocks are promoted through newsletters and advertising.  There are sound reasons for this method of promotion , as the penny stock companies usually promise the newsletter advertisers a block of stock in exchange for getting the stock price rise.  The newsletter usually touts the “potential” for the stock to rise founded upon certain factors occurring and usually pontificate, at length on the unbelievable potential the stock has should these “certain” factors occur.

I usually recommend the potential investors in penny stocks contact the stock itself and ask about capitalization and revenues .  Without exception, these stocks usually are extremely undercapitalized and have no revenue to speak of .  Usually an investor questioning the company will be rerouted to an answering service or the newsletter promoting the penny stock.  The SEC has estimated that the majority of penny stocks are in the “pump and dump” category. And with good reason.

A normal stock, traded on an exchange, usually has a firm designated as a market maker in that stock, along with a floor specialist who facilitates the trading of that stock.  This method allows the public transparency in the trading of any equity and allows an investor to see the exact and verifiable volume and price movement of the security.

This transparent system is little more than an illusion in the Penny Stock market, and the penny stock issues are usually without a true market maker.  All to often, the market maker in a penny stock scheme is the very company itself.  The fox is in the henhouse, so to speak.  What this means is that the Penny Stock company is setting both the bid and ask prices on its own stock.  Further, most Penny stocks are traded on the ‘Pink Sheets” which puts it into the category of trading in the wild west .

Many experts have estimated that 9 out 10 Penny Stocks fail inside the first year of their offering .  I have heard numbers as low as 7 out of 10 bandied about, but the point is simple.  When you are trading penny stocks you are playing in a non-transparent, non-exchanged oriented market, and this is the recipe for disaster .  It is usually just a matter of time.

in summary , I won’t suggest that all penny stocks are fraudulent or scams , just the majority of them, and odds do not favor long term success.  My warning is clear and based on years of experience , there are simply too many exchange traded stocks that will earn you ample money than risking sums of your hard earned money in the Penny Stock Market.

I am a long time institutional and retail trader. I still day trade every day, but usually only from 6 AM to lunch break. After so many years of trading, I take pleasure in sharing some of the knowledge I have acquired in sharing it with those in the early stages of their trading career.

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Forex markets are huge unlike the stock market which can be manipulated by a few big players in the market. What this means is that a strong trend cannot be sustained in the forex market without the pouring of tremendous amount of capital in the market by the big players. This is unlike the stock market where few big players placing orders can drive the stock price up. Watch this Freedom Forex Formula videos that show how to build a $34 million forex account from scratch using nothing but simple forex methods. Download this special manuscript the explains the forex method in step by step detail FREE. You should not miss these forex training videos. They are full of premium content. Learn this Fibonacci Retracement method FREE that pulls 500+ pips per trade! Get this 1 Minute Forex Trading System FREE!

So how do you filter a strong trend from a weak trend? Now, we have said that the 10 day EMA is going to be our focus when trading strong trends. Wha we need to do is to add a filter based on this exponential moving average (EMA) in order to be sure that this is no ordinary trend.

In case of an uptrend we want the 10 day EMA above the 20 day exponential moving average that should be above the 50 day EMA which should be above the 100 day EMA. Plus the price action should be above the 10 day EMA for a period of at least 10 candles to confirm that this is a real strong uptrend .

Similarly in case of a downtrend, the proper order of the EMAs should be 100 day exponential moving average above the 50 day exponential moving average that should be above the 20 day EMA which should be above the 10 day EMA. Plus the price action should be below the 10 day EMA for at least 10 candles to confirm that this a real strong downtrend .

Choosing the best penny stock is essential to make it big in the stock market. Thus having the finest penny stocks gives you the opportunity to earn huge returns with little capitalization.

There are various penny stocks to choose from that investment companies have showcased. With the abundance, looking or the best penny stock there is becomes quite a difficult task. Moreover, there are counterfeit stocks that swindle people into investing their money only to end up to be merely a hoax. These are scams and your investment can end up of no value at all.

The following are very useful tips so you can determine which is the best penny stock that is worth investing your time and money.

Participate

Having to invest your funds in the stock market does not stop you from feeling unsecured about your investments due to the different risk involved. Employing a positive attitude helps you build better decision most especially in choosing the top penny stocks in the market.

Find out the Essentials

Acquiring an outstanding deal in the stock market is never an easy feat. For you to get a good deal, you must do your part to achieve it. Start by understanding the varying price trends and fluctuations in the stock market. Before investing your money, do some inquiry or background check on the penny stock you are to put an investment. This entails being familiar with the company; verifying with the SEC whether the broker, dealer, the salesperson and the stock itself is legally registered. The SEC can be very helpful in providing valuable information with regards to the track record and expertise in the business.

Learn from the Experts

Due to the highly modernized environment, you can easily find a lot of sources and information on the finest deals on the best penny stock. The internet serves as an excellent tool for most investors allowing them to do research online on penny stock investment opportunities. Thus the internet showcases a lot of forums, popular stock message boards and blogs.

If you are one of those people who want to escape the hassles of do-it-yourself research, a broker or a registered financial advisor can be a tremendous help in evaluating your investments. But be cautious, because in a penny stock business there can be a lot of unscrupulous brokers whose only goal is to sell. Just make sure that the advices you receive from them, benefits your investment needs.

Do Research

A lot of people think that penny stock trading is a risky venture. Rates go up and then can suddenly go down. The stock market is affected by economic factors, varying rates and business flow. Keeping yourself updated with these trends enable you to make informed decisions especially on picking which is the best penny stock to invest.

Discover More with Experience

Continuous learning and keeping yourself up to date is very essential to select the best penny stock. First time experience with the stock market adventure can certainly be unpredictable and can be quite terrifying. But as time goes, you will be able to grasp the ins and outs of the stock market world and in time discover what to expect and how to deal with it.

Find How to Start Trade Stock To Turn Profit Right Away
If you are looking forward to generating some extra money, alongside your main source of income, then stock trading could be the perfect thing for you. So how to start trade stock? Since trading stocks is not actually rocket science, so it is not too tough to start with. But one must have a proper understanding of the basics in order to properly identify the stocks that could turn profits by trading.
The first step is to ensure that, one must read a lot of information about online stock trading.There are many books that provide the basic orientation to the stock market, especially the terms used in the stock market and how things mainly work. Most of the books and websites also provide information about the history of stock exchange. Studying history of stocks may not seem to have much relevance, but it would assist you in understanding the current market situation better.
After the basics are clear in the mind, its time to practice trading. However, it isn’t wise to trade money while practicing. In that regard, there are certain websites that provide virtual portofolios of the stock market, where there is no money involved, but you can practice trading on the live market. This gives a feel of the real market, and in all probabilities will help you shed your initial apprehensions. 
After you are comfortable with and is raring to make some profit, then it is time to start real trading. However, for trading, a brokerage account is required, which lets you to sell and buy shares in exchange of a small charge. You would find a lot of professional broker firms that can take care of your trading needs. However, most of them are a bit pricey, but they offer additional services like stock tips, help in maintaining your portfolio, and much more. Trading happens over the computer with an Internet connection or over the phone. However, most broker firms provide a personal terminal to each of its customers for better trading experience.
There are a few strategies of trading in the stock exchange. Of course, the strategies cannot be labled as right oe wrong, as it depends on trader to trader on what tactics he/she takes. Therefore, books wouldn’t serve the purpose. While a few of the dealers like to stick with long term profits and would generally invest in stocks for a long time; while some would prefer short term profit and would want to make frequent transactions and take advantage on the fluctuations in the daily market. These strategies can only be developed through experience. 
This last tip is probably the most important for beginners: Trading stocks successfully is possible only by adaptive learning. No one can be expected to make profits from his first day itself. The truth is that everyone has incurred losses during their trading career; otherwise the whole stock trading system wouldn’t have been viable. Therefore, one must not be bogged down by losses, as learning from mistakes is the best way to learn. And in the world of stock trading, this is only way to succeed. Nevertheless, by beeing well trained and while following the right advice, this can be totally avoided. There are many other investments options if you think stock trading is not for you.