| Stock market investing guide |
According to the U.S. Department of Labor, approximately 320,000 brokers and traders are currently employed as securities, commodities, and financial services sales agents. Of those agents working solely in securities trading, around 143,000 work exclusively for brokerages and exchanges while nearly 57,000 are self-employed independent agents. Nearly 264,000 agents work with wage and salary compensation while the remaining agents receive only commission incentives. A total of 829,700 people are employed as security and commodity brokers or as service personnel.
Stock Market Investing for fun and profit
If you want to know what a penny stock is, don't ask around.The answers will vary depending on who you ask. In the financial services arena, things are either very clear, no gray areas anywhere, or green if you like the color. And, where it comes to definitions, some have very clear cut, while others aren't so clear. Penny stocks are one of those that aren't so clear. If you go to a brokerage that's high brow and will not consider an investor with less than a million dollars, a penny stock will be anything that sells for less than $5 or whatever their limit is. Another brokerage, which may not deal with million dollar limits will look at penny stocks as those below a dollar. And many others will just not want to talk about it.Penny Stock DefinedA penny stock is usually one where the price of the share, the market where you can buy or sell it, and the market capitalization of the company all fall below a certain level. Many brokerages will not look at any stock where the cap is low as anything other than a penny stock no matter where they are traded. But, all in all, it depends on any one of those factors. Official or Securities Exchange Commision's DefinitionThe Securities Exchange Commission considers all stocks with a price per share of less than five dollars a penny stock; brokerage firms may be far more lenient. Often penny stocks will be qualified as such based simply on the value of each stock, specially if it's below the $5 mark. But when the stock is from a company with a low capitalization, and is not traded on one of the many major stock exchanges, then it will be considered by and large as a penny stock. Penny Stock and High RiskPenny stocks are probably the highest risk of all of the investments in the stock market, but not the only ones, by any means. These stocks may also give you the highest rewards if you carefully study them. These are the stocks where you could literally loose your total investment, or recoupe your investment many times over. These are very wild and unpredictable investments too. You could have a penny stock worth cents today and tomorrow, by some incredible fluke, or because some research or development gave the company the results it expected and as a result the stock may be worth in the $tens or even more. The problem with these stocks is that you will not find many brokers willing to trade in them. Brokers aversion to Penny StocksThere are many reasons why brokers do not like to deal with penny stocks. Being a high risk product is the main one but the fact that they can go up or loose all their value literally overnight is another. However, it probably is more because the broker requires more time to learn or study these types of stocks than any other that they are not very inclined to spend any effort on them. Market CapAlthough price is one way to qualify a penny stock, market cap is another, and probably more important way to decide whether or not a stock is a penny stock. Market cap refers to the amount of money a company is worth. Unfortunately it does not mean that it has that much money, just that it is worth it. As a result, a small market cap company means that in tough economic times, such as we are facing today, it may not be able to weather the storm. Often, when a reversal of fortune happens, the small cap company may go under quicker than any other better capitalized company. In the final AnalysisInvesting in penny stocks when you are starting out in the stock market arena isn't a good idea. Not because they are totally bad investments. They aren't. If you know of a company that is starting out and has a product that you think has great market potential, there is every reason for you to invest in it. The chance of purchasing shares at a very low price is incredible. And, if the company suddenly experiences a growth spurt you will enjoy a fantastic return as well. Finding and Trading in Penny StocksBy the way, these penny stocks are usually traded over-the-counter or as is more often the case, on a OTC bulletin board. The most common way to find these stocks, in the US, is on the Pink Sheets, which list these stocks. There are many sources for these penny stocks. Due dilligence is the main thing about these stocks. Do your study and be careful. Resources For your ConsiderationOne product that is getting high raves currently is the Penny Stock Prophet! This is a package that was put out by a MIT student and he has listed some penny stocks that he made money on. This student "discovered that the key to developing a formula to identify winning stocks was to identify how the Psychological Support Level (PSL) affected the 4 shared variables of the winning stocks. Psychological Support Level is nothing new in the trading world. It is the activity of human behavior that can cause a stock to be sold at well below its actual worth. In fact, many investors believe PSL is the key to discovering under-valued stocks. However, just discovering undervalued stocks is not enough. Discovering the undervalued stocks that are about to move…" is what this package promises. Worth checking out if you are seriously considering working with penny stocks.
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