Blog : New to Penny Stocks? Start Here...
by Peter Leeds on July 3rd, 2016
Penny Stock Beginners!
Get up to speed quickly and easily. You are about to learn:
- How do I find penny stocks that will spike higher in price?
- Where do penny stocks trade?
- Is it difficult to trade penny stocks?
- Many more topics...
*** Alternatively, we can do all the work for you. For 55 cents/day, you get our top picks, along with full analysis and target prices. ***
What are penny stocks?
Penny stocks are shares which trade for less than $5.00 each. Some might be multibillion dollar companies training for $4.99, while other penny stocks are extremely tiny companies which in some cases trade for as low as fractions of a single cent.
There are good and bad penny stocks. Some are high quality companies which just happen to be trading at low prices, because the investment has been overlooked, or is undiscovered, or has been unfairly valued by shareholders.
On the other end of the spectrum, there are thousands and thousands of extremely low quality penny stocks, and these need to be avoided at all costs. (Don't worry, we'll tell you how to avoid the bad ones in just a momment).
[Video - What Are Penny Stocks?]
Where do penny stocks trade?
Since the higher-quality exchanges have greater listing requirements, fees, and regulations, you will typically find the better companies listed on these venues. For example, the Bulletin Board (which is a subsidiary of the NASDAQ) has a significant number of high quality penny stock companies. As well, there are some penny stocks which trade on the NYSE, NASDAQ, and AMEX.
Low quality penny stocks typically trade on the exchanges where it is easy to get a company listed. Some of these dark markets (which should be avoided at all costs) are the Pink Sheets, the OTCQX, and the OTCQB. These are a magnet for awful companies, bankrupt businesses, and financial train wrecks.
By avoiding the dark markets (and sticking to the recognized exchanges), you significantly increase your odds of finding higher-quality penny stocks companies, which will grow, last, and enrich their shareholders.
[Video - Where Do Penny Stocks Trade?]
Why do penny stocks have such a bad name?
The majority of penny stocks, 95% from our perspective, our extremely low quality companies. Most investors who buy shares in these types of businesses end up losing some or all of their money.
In fact, the majority of people who invest in penny stocks lose money. However, it is possible to invest in very high quality penny stocks, which are growing, and helping their shareholders profit.
Aren't penny stocks used for scams and frauds?
Yes they are. Since they are so thinly traded, meaning that there is not a lot of buying and selling activity in the shares from day to day, penny stocks become the perfect vehicle for scam artists and pump & dump promoters.
These dishonest fraudsters take advantage of people by driving share prices higher. They typically do this by misleading potential investors about the prospects of the company.
Remember, the majority of people on the Internet talking about penny stocks have been (or are) getting paid by the companies which they're talking about. In many cases, you are simply reading a glorified advertisement in disguise.
If you avoid following any stock picks which you hear about for free, you will be immune to all of these dishonest and shady tactics. However, there will always be promoters and pump & dump artists who are basically "putting lipstick on a pig." They are going make up a bunch of stories about how great some company is, as they try to drive everyone into investing the shares... while they unload their position and profit handsomely.
[Video - Step 1 to Avoid Risks]
So then why are penny stocks so popular?
There are a lot of good things going for penny stocks. While some may warn that penny stocks can be volatile and move quickly, that is actually their charm.
Where else could you turn $500 into several thousand so quickly? If you get involved in the right types of high quality penny stocks (which we'll show you how to do), the volatility and the quick moves actually becomes a profitable benefit.
Is it difficult to trade penny stocks?
It is very simple to trade penny stocks. Like anything, it is only difficult if you don't learn how to do it properly.
You will not get rich overnight. Anyone who promises you a yacht and a Lamborghini from trading penny stocks is simply trying to get you to subscribe to whatever product they are promoting.
The good news is that we will show you how to approach penny stock trading, so that it is fun and profitable. You will avoid mistakes and pitfalls, and be able to become very successful at profiting from low-priced shares.
To make your first buy, all you need is a brokerage account and some money. Then when you learn which penny stock you want to buy, such as those tiny companies with tremendous upside which we reveal to subscribers of Peter Leeds Stock Picks, you can buy some shares through your stock broker.
[Video - Official Discount Broker Reviews and Ratings]
How do I find penny stocks that will spike higher in price?
Step One: The first step is to avoid the common pitfalls. This means that you should never trust free stock picks, and you should always avoid shares which are listed on the dark markets and the pink sheets. By doing just this first step, you are going to avoid the vast majority of risks, and all the reasons which give penny stocks such a bad name.
Step Two: The next step is to find high quality companies, which are tremendous, incredible, growing businesses. As they expand their market share, and increase their revenues, these tiny companies can absolutely turn a small investment into a small fortune. If you become a shareholder in companies like this, you will be rewarded handsomely.
The best way to locate the high quality companies is to approach penny stocks as businesses. When the business does well, the share price will often follow suit.
The great news is that we can show you exactly how to find penny stock companies just like the ones we are describing here. That is what we do.
What should I look for in a penny stock investment?
Of course, every stock is different, just as each person needs to develop and trust in their own style. Here are some of the things we look for in our 29 point Leeds Analysis process, which we use to find winning penny stocks for our subscribers:
- proven management teams
- growing market share
- improving financial ratios
- decreasing costs
- strong balance sheets
- expanding revenue levels
- low attrition rates
- manageable burn rates
- broad base of customers
- returning clients and recurring + expanding orders
- expanding industry
Use these points above to help guide you towards high-quality penny stocks. Alternatively, you can let us do all the work for you. You can have instant access to all high-quality, low-priced picks, by subscribing here.
Wait a minute! What's the catch? Why are you doing all of this?
The team is led by Peter Leeds. It has been a very long time since Peter has had to do anything for money.
He absolutely loves what he does, and is trying to bring ethics and integrity back to an industry which has been overrun by dishonest players and con artists.
He started trading at 14 years old, and lost all his money within two weeks. He is now trying to help the 14-year-old version of himself from making the simple and dangerous mistakes which cost him all his savings as a boy.
If you decide penny stocks are right for you, and you want to benefit like over 42,000 other people have, then you may consider subscribing to the Peter Leeds stock pick newsletter (which works out to an average of 55 cents per day).
If not, that's no problem at all. We have enough subscribers, and now are focused on helping people to avoid mistakes as they try to find the high quality companies which could make a difference to their investments.
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