Penny stocks. in general, are considered low-priced shares of the small companies . Please keep in mind that such the stocks can infrequently trade; it means that once you have penny stock shares, it may be tough to sell them.

As it could be also difficult to seek quotations for these stocks. they seem to be impossible to exactly price. Investors in penny stock are advised to get well-prepared for the possibility that they’re able to lose their entire investment any time.

Penny stocks tend to trade not only over-the-counter, but also on the U.S. securities exchanges, foreign exchanges, or facilities of U.S. exchanges. It’s better for you to learn more about the market where the penny stock trades in order to define how much demand there will be for this stock, plus how hard it shall be to sell. Especially, always be careful if your broker is likely to offer to sell you the newly issued penny stock, which seems to have no established trading market.

Something Important To Keep In Mind About Penny Stock

In any case, to see whether or not you are contacting a reliable broker, your broker is strongly asked to provide you with a detailed statement of your financial situation as well as investment goals that explain why his firm has identified that penny stocks are an indeed compatible investment for you. Moreover, he is also required to gain your agreement to propose penny stock transaction.

What else? Before purchasing any of them, federal law will also request your salesperson to express some basic info about the bid and the ask on the stock, coupled with the compensation which the firm and the salesperson get for the trade. After the trade, the firm also needs to send a confirmation of these prices to you. As the traders, you need the price info to define what loss or profit you shall have when selling your stock.

What is the ask price? Its the wholesale price in which the dealer is ready to sell stock to other dealers. So, how about the bid price?

Its the wholesale price in which the dealer is ready to purchase the stock from other dealers. At this point, the dealer can add a retail charge to such the wholesale prices as compensation. After you buy penny stock. the brokerage firm has to send you a monthly account statement, giving an in-depth estimate of each penny stocks value in your account, in case that there is enough info to make an estimate.

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