How to buy penny stocks

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Buying Penny Stocks is a skill not so many people understand. Before you buy penny stocks, you first of all need to understand penny stocks, before buying them. Read on for guidance.

1.    Understanding Penny Stocks

Penny stocks, also known as ‘micro-cap stock’ are publicly-traded stocks with a very low price per share. A lot of them cost less five dollars, with some costing less than a dollar. This affordability is why they are referred to as ‘penny stocks.’ Penny stocks are usually sold by small companies and carry a lot of benefits when you purchase. Since you can purchase them at relatively low costs, you can purchase very high volumes. And high-volume of stock means more opportunity for enormous gains.

Penny stocks have their downside as well; they are not very liquid. This means that they are not as demanded as the other marijuana stocks. When you have penny stocks, you may experience difficulties finding a buyer when you want to sell your shares. Plus, the guys that issue this penny stocks may have a weak market and a fragile financial profile. Bear in mind that when you invest in penny stocks, you can lose your entire investment.

2.    Buying Penny Stocks

Before you purchase penny stocks or any marijuana stocks for that matter, you should investigate the company first. Since it is usually small companies that sell penny stocks, information might not be forthcoming. You should, however, try your best to examine their financial health before you purchase.

When you use sites like Google Finance or Yahoo Finance, you can find the information you need. You can also use services like OTC Bulletin Board and the National Quotation Bureau for more in-depth information.

The best time to buy penny stocks is when a company makes an Initial Public Offering (IPO).

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