Oct 11, 2012

Posted by in Penny Stock | 0 Comments

Facts about NASDAQ Penny Stocks

NASDAQ Penny StocksHuge Returns are Possible from NASDAQ Penny Stocks

Consider these fantastic gains of NASDAQ penny stocks. POTG gains 2600%, NSRS skyrockets by 1100%, LEXG gains 2550% and AMWI up by 1900%. These are only some of the latest returns of penny stocks that have enticed investors. Huge returns generated from overlooked penny stocks can be quite lucrative, and it increases the value of your portfolio. There is no way larger companies, can come close to such returns in the short term.

Usually NASDAQ penny stocks are referred to those stocks that are traded below $5 for each share. Some define it as companies that have market capitalization below $100 million; however, this can be misleading. Penny stocks can also be those that are traded OTC (Over the Counter), or via pink sheets, or those which can have up to 0.0001 cent value.

Generally, companies determined to be penny stocks are companies that are just starting their operations. They are in the process of developing their business and products, and have the potential of delivering huge returns, when they join the mainstream market, if they are able to do so.

The disadvantage of this investment option is that for finding winners, you need to research through thousands of companies that are going to remain as penny stocks. Such companies usually are poorly managed, or have substandard products, or are just fake companies. Usually, these types of companies are found on pink sheets or OTC, and hence going with NASDAQ penny stocks will lower your chances of investing with losers, and increase chances of picking winners.

How NASDAQ Penny Stocks can be Chosen

An excellent way for protecting your penny stocks investments is to do quite a bit of research. If you apply your diligence to the story of the company and its numbers, you can understand the risk levels with such stocks. The things you should find out include the duration the company has been operating, information about its cash flow, whether it generates positive returns, since how long such returns are being generated, and most importantly look into the team managing the company, including their experience and history.

These indicators are very good to determine the investment worthiness of a company, and more so, when you are considering penny stocks. The average volume of stock traded should also be looked into. It would be very frustrating to find a stock shooting up in value, but you are unable to sell it, as it is illiquid.

You also need a very good broker, when you are considering penny stock trading. Most of the reputed brokers like Schwab, Sottrade and Etrade allow penny stocks trading. Always make sure the broker is reputed, as you do not want to end up with someone who is gone the next day.

The most important point is that you should not invest your money ever in penny stocks, when you are unable to afford any loss. These investments involve highs risks, and although winners can provide fantastic returns, in majority of the cases you are likely to lose or just break even. You will experience quite a ride on a roller coaster, when you invest in NASDAQ penny stocks; however, many investors need this kind of thrill.

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