Investing in penny stocks involves a high degree of risk, and it is possible to lose the entire investment.
A Guide to Understanding and Purchasing Penny Stocks Penny stocks are generally defined by the Securities and Exchange Commission (SEC) as shares of small companies that trade for less than $5 per share. While these stocks can be appealing due to their low entry price, they are known for high volatility, lower liquidity, and a higher risk of fraud compared to stocks traded on major national exchanges. 1. Choose a Brokerage Firm how do you buy penny stocks
: Determine if the company is current in its reporting obligations. Companies that do not provide regular financial disclosures are generally considered higher risk. Investing in penny stocks involves a high degree
: Be wary of aggressive promotional "tips" found via email or social media. These are often used to artificially inflate a stock's price so that early investors can sell their shares at a profit before the price crashes. : Be wary of aggressive promotional "tips" found