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Best List of Penny Stocks to Watch & Trade on the New Market
The stocks you really have been reading about here are ones which are expensive to invest in. You do not have to stay with these expensive stocks. You have the choice to choose penny stocks. Penny stocks are stocks from companies that trade at very low values. The SEC states that a penny stock has a value of less than $5 per share and would not be listed on one of the major exchanges. On the surface, penny stocks seem interesting because of how cheap they are. At exactly the same time, these stocks are risky and hard to work with since it's impossible to figure out where they may go when you trade them.
You can trade these cheap stocks successfully with our best penny stocks to buy now.
What's a Penny Stock?
A penny stock is a stock which has an extremely small market cap. Along with having stocks less than $5 per cent, the market cap of the company is around $50 million to $300 million in value and isn't necessarily a worldwide recognized group. The stock is also trading in some smaller markets. In the United States, penny stocks are traded over the counter. That is, the transactions are managed between parties without an exchange. The OTC Bulletin Board and Pink Sheets both record information on how these penny stocks are organized. The most noteworthy feature of penny stocks is that they have very small values. Some of these stocks may not even be worth a cent per stock.
The overall thing about penny stocks is they're very cheap. However, as you'll read next, these stocks are incredibly risky.
Serious Risks To Trading Penny Stocks
Hard to Prepare Trades
Many investment brokers won't work with penny stocks with the belief they are overly risky and difficult to recognize. They may also struggle with planning orders due to the markets involved being slower than the major ones. There is also the worry about what happens when a single trade shifts the value of the inventory.
No Real Standards
Although a lot of stocks have strong standards for how they should be traded, you are not likely to find these in penny stocks. A stock like this does not have to meet any significant standards to get onto an exchange. An OTC penny stock doesn't have to file information with the SEC. The OTCBB does request that the stocks that it lists do file documents with the SEC, but this isn't necessarily a requirement. You can still check the SEC to see if a stock you want to invest in has proper filings, but that may be hard to find.
Hard to Find Information
The following issue surrounding OTC penny stocks is that you may not get enough details on what is available. You are not likely to find much information on penny stocks since news agencies aren't likely to report on them. These companies are too small for some of those news agencies to really take seriously.
You might read information about penny stock tips to check out for example stocks which may be intriguing for people to invest in. Those reports are often made with heavily biased information by those who have positions in those stocks. They may also give you names and symbols but not enough information about what you could expect to realize from those stocks. This makes it harder for you to really get the details that you require. What is even worse is that these stocks are not easy to access via a site. If you tried to type in"OTC stock quotes" on a search box, then you could just encounter a whole lot of blogs that record details on these quotes. This just makes penny stocks more unreliable due to the lack of available data in the procedure.
Easy to Inflate or Adjust
Perhaps you have noticed cases where the value of a penny stock has undergone a dramatic shift in a very brief moment? For instance, in February 2018, Reach Messaging Holdings, an OTC stock below the RCMH ticker, experienced a significant bulge in its value that was really short-lived. The stock had a value of $0.0003, but it soon moved up to $0.0008. It then went back down to $0.0003 in just a day and eventually to $0.0002.
Imagine if you had a million shares in RCMH at this point? You might have purchased them when the stock was $0.0008 with the belief that the inventory would keep on rising. You'd have spent $800 on the stock. As that stock drops back to $0.0003, you would have lost $500 on your investment. Simply put, you went with the belief that the stock would keep on increasing in value, but that stock actually bottomed out.
That RCMH stock may have increased in value because one person made a enormous trade in that stock. That individual might have bought 10 million or more stocks in RCMH and then sold them off in a few hours or days after the stock saw a sizable increase. Worse, that person may be someone from within the company. This is a valid problem for penny stocks that a lot of people fail to think about. It only takes one person to inflate or deflate the value of a stock. In actuality, this often occurs with stocks which aren't very liquid. A stock that has no liquidity isn't likely to change much in value unless one person managed to devote a huge order and receive a sizable number of shares sold or purchased all at once.
Pumping and Dumping
The pump and dump strategy is a related issue that some penny stock services often struggle with if the volume is extremely low. Financial advisors like ziptrader and investopedia do not use this technique.
They are some of the top & best penny stocks to follow in getting good results in your gains. Although it is not illegal, it certainly feels like it ought to be since it directly manipulates the value of a penny stock and is often done by someone from within the business, such as:
1. A person buys a high number of shares in a stock. This is often for penny stocks, even though it could theoretically happen at any stock. The absence of volume of several penny stocks makes them more likely to be targeted by pump and dump schemes. They are much easier to manipulate.
2. That individual then attempts to promote a stock by offering false or possibly misleading statements about the stock's capacity to grow. In the past, this was done through cold calling techniques by telephone. Today, people can go to social media or put up their own blogs to market these stocks.
3. Individuals then fall for these statements and purchase the stock. The people who choose to buy these stocks are usually prepared to invest in them without thinking twice. They might be emotionally pressured into investing in these stocks rather than investigating the company thoroughly.
4. After enough people buy the stocks in question, the person who started the scheme will sell off his shares as that person will have made enough money from the people buying the stock.
5. The people who fell for the pump and dump scheme could lose hundreds or even thousands of dollars from this trick. The problems with the pump and dump scheme are very significant.
Best Stocks to Invest Now for Beginners in Stock Market Trading
The first step in successful stock market investing is to Understand the stock exchange. This is a very crucial step in your investing journey. If you start investing in the stock market with a thorough or at least a great understanding of the stock market itself; you may suffer losses at the beginning. These first losses may discourage you lifelong from job stock market investments. So, it's highly important that you start your journey being fully prepared.
A stock market is basically a market to buy and sell Stocks of those companies. It refers collectively to all the stock exchanges, where the issuing and trading of stocks take place. The stock trading could be performed on the correct exchange platform or on an over-the-counter sector. Stock market is also referred to as the equity market. The stock exchange provides a company with a mechanism to acquire capital from investors instead of a partial or fractional ownership.
The stock market has two main components viz. primary market and secondary market. The new issues of the stocks are sold in the primary market by the company going public. The subsequent buying and selling of the stock, after it has been listed and marketed by the company, takes place in the secondary market.
Stock Exchanges Today:
Stock exchanges have been established in all major financial Centers and cities across the world such as New York, London, Hong Kong, Singapore, Tokyo, etc..
New York Stock Exchange (NYSE) and the NASDAQ will be both Largest stock exchanges in america. NYSE was founded in 1792. NYSE is the biggest stock exchange in the world in terms of market capitalization.
Stock Market Risks:
There are a number of dangers associated with stock market investing. The volatility of the stock prices is among the most important risks associated with investing in stocks. The rise and decline in the price of a stock even by 20% every day, is not a matter of surprise.
Sometimes, There's a widespread decline or fall in the Costs of almost all the stocks. This situation is referred to as a stock exchange crash and is very painful to the stockholders. In the event of a stock market crash, the investors may not find any buyers for many of the stocks they hold.
Regulators of the Stock Markets:
The governments of different countries have established Regulators to monitor the actions of the stock exchanges with an aim to protect investors.
In the US, the Securities and Exchange Commission (SEC) is The main regulator which monitors the U.S. stock markets. The SEC outlines that its job is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
Stock Market Functionaries and Players:
The stock exchange has a number of functionaries and players. They are stockbrokers, traders, portfolio managers, stock analysts, and investment bankers. They have different roles to play but are interrelated.
Stockbrokers buy and sell securities on behalf of the investors. Portfolio managers look after and manage the stocks or investments for their clients. Stock analysts research on the stocks and rate them for buying and selling. Investment bankers work for the companies because of their IPOs, mergers, and acquisitions, etc..
One of the safer methods of investing in stocks is investing in mutual funds. Mutual funds invest in stocks as well, however they pool the investible funds of a large number of investors, and then invest that collective pool of funds on the respective stocks. If there is any loss in one particular stock; it is spread over a high number of investors and consequently, the loss to a single investor is very bearable. This is simply because of the large magnitude of the total funds. Therein resides the beauty of investing in stocks through mutual funds.
The benefit of diversification, which is not available to some Small investor in pure stock investing, becomes available to the smallest individual investor thanks to mutual funds. The mutual fund companies, also called asset management companies, employ professionally qualified and experienced persons to manage the investments. Their expertise and professional approach to stock investing serves the tiny investors very well, thus, mutual funds are an effective, efficient, and less risky way to invest in the stocks. However, mutual funds aren't a totally risk-free way of investing. Mutual funds also include various fees and expenses. The investor must bear them ultimately.
Benefits of Mutual Funds:
· Diversification: Mutual funds have well-diversified portfolios. They have a large number of stocks of numerous companies across many industries. This helps them in bearing the risk due to a sudden or large loss brought on by a particular stock or industry. By spreading the investments across the spectrum of shares, companies, or industries, you can protect your investments in the times of wide swings or market fluctuations. Mutual funds are a real life application of an age-old maxim"Don't put all your eggs in one basket".
· Variety: The mutual funds, particularly the large and well established mutual funds, have a huge amount of money for investing and this means that they are able to invest in an array of assets and asset classes. For example, some mutual funds may invest in a mix of large caps and mid caps. The large caps give stability to the portfolio; while mid caps offer the growth potential.
· Affordability: If investors want to build a well-diversified portfolio, they will need a enormous amount to invest. But, a small investor can also invest in a well diversified portfolio through a mutual fund by investing an amount money that is affordable.
· Dividend: You can find some regular income through the dividend declared and distributed by the mutual fund.
· Liquidity: You can also redeem your mutual fund portfolio in the net asset value (NAV).
· Professional Expertise: Mutual funds are managed by people with a great deal of financial expertise and experience. This makes it much easier for you to reap the benefits of smart investments.
Benefits of Mutual Funds:
· Prices: You have to bear ultimately all the expenses, fees, and charges associated with the operations of the mutual fund or the asset management company. This lowers the value of your mutual fund portfolio or the net asset value (NAV) in addition to the returns. You must bear these costs even if the operation of the mutual fund is adverse i.e. you have made losses together with the decline in the total value of your mutual fund portfolio.
· Risk of Loss: You have all the risks related to inventory investing when you invest in a mutual fund. You may lose a part or all your money in a mutual fund investment in the event of market volatility.
· Performance: Though the mutual funds have a past performance and track record, it does not be certain that the future performance would be outstanding.
· Limited Potential: When markets are on the move with higher growth in selected stocks or industries, you may not gain full profit potential of investing in these particular stocks or industries. This is because your investments have a diversified mutual fund.
· Lack of Guarantee: The mutual fund investments aren't guaranteed by the government or by any other government agency like the guarantee you have to your deposits in the bank in many countries e.g. guarantee of Federal Deposit Insurance Corporation (FDIC) in the united states.
You can decide on whether to invest your money in mutual Funds after considering the advantages and disadvantage of the mutual funds in your individual case, taking into account your investment objectives, size of portfolio, risk appetite, etc..
Best Stocks to Buy Now
There are various types of mutual funds where you can invest. Mutual funds have three main categories viz. stock funds or equity funds, bond funds, and money market funds. Each category of the mutual funds has its own unique attributes, returns, and risks. Higher the return potential, the greater is the risk of loss.
There are some restrictions imposed on the mutual fund with Respect to where and how much it can invest in different types of assets or stocks depending on its category. But these rules vary from country to country. In a few countries, there are rules that require a mutual fund to invest at least 80% assets in the type of investments belonging to its announced category. You may be aware of the exact type of investments in the mutual fund prospectus.
Money Market Mutual Funds:
These are funds that invest in short-term Investments or securities issued by the authorities, or top-level creditworthy corporates. They are less volatile when compared with the other types of mutual funds. But, they have low yields too. The yields usually move in tandem with the short-term interest prices. They offer a fantastic alternative to keeping your money in cash in a bank account, as they provide you high liquidity and you can take out your money very quickly.
Bond Mutual Funds:
These are funds That invest in the bonds issued by the government and companies. They have higher risks when compared with money market funds, but less danger in comparison with the stock or equity funds. The majority of the bond funds focus on higher yields. The bond fund's earnings after expenses are referred to as bond yield, which mainly depends upon bond quality and maturity.
These funds mainly face credit risk i.e. the danger that the counterparty viz. Bond issuing government entity or the company may fail to pay the coupon/interest or the principal amount. The credit risk depends upon credit the quality of the bonds contained in the fund portfolio. These funds also face interest rate risk and usually, the market value of the bond funds goes down when interest rates rise, particularly in case of longer term-bonds. Usually, the lower the quality or the longer the maturity of bond; the greater is the yield and risk.
Stock or Equity Mutual Funds:
These funds invest in the shares of various companies. They have higher risks compared to money market or bond funds. They also have high volatility. But, the stock or equity mutual funds have performed better than other investments over the long term historically.
These funds mainly face the market risk The prices of stocks may fluctuate considerably. The prices may fluctuate due to many reasons, e.g. changes in the overall economy, industry level happenings, individual company or stock level developments associated with earnings, input costs, management, etc..
Stock or Equity Mutual Funds is a broad degree category and include many sub-categories of mutual funds in it, such as:
· Growth Funds: focus on stocks with high growth potential.
· Income Funds: focus on stocks paying regular dividends.
· Sector Funds: focus on a specific industry or sector e.g. IT, telecom, etc..
· Index Funds: focus on a portfolio of shares replicating an Index to accomplish the exact same return, e.g. S&P 500.
· Balanced Funds: concentrate on a portfolio with an optimum combination of both the stocks and bonds.
Buying and Selling of Mutual Funds
You may buy the stocks of mutual funds in a number of ways. The Most common way is buying from the fund itself or buying through a financial advisor.
The Purchase Price for mutual fund stocks is usually calculated on the basis of the per stock net asset value (NAV) of the mutual fund. Depending on a mutual fund, there may be a stockholder fee imposed at the time of buying such as sales load. The NAV of a mutual fund is calculated at the end of the particular business day by dividing the entire value of the holdings of the mutual fund after deduction of expenses, by the entire number of shares owned by the mutual fund. Buyers of mutual funds buy in the NAV calculated after they place the buying order.
The shares of mutual funds are redeemable i.e. the investor can sell the stocks back to the mutual fund at any point in time.
All said and done, mutual fund investing is a great and Amazing way to invest in the stocks. There are a number of mutual funds with wide-ranging features, different types of portfolios, and investment philosophies. You may choose the one which best fits your unique needs and circumstances in terms of return objectives, risk tolerance, liquidity needs, etc..
It will give you a good opportunity to learn about stock Investing if you continuously track the performance of your mutual fund portfolio and the way it moves with the overall stock markets in addition to with the peer group of mutual funds.
Thus, you will start recognizing a pattern of price movements From the stocks with terms of the financial environment, the operation of the businesses and businesses, earnings, results of companies, etc.. After a while, when you become well versed with all these stock investment related things, you may decide to take a dip into the broad sea of stock investing on your own; and come out with flying colors.
