Penny stocks are the most speculative and volatile stocks that are usually traded over the counter or via pink sheets. Penny stocks are stocks that are valued in pennies or cents that is, their values less than either five dollars or less than one euro in America and Europe respectively. Not only this, penny stocks are traded in almost every country and in each country the criterion is different since there is no set defined rules to trade penny stocks. Unlike all major trading stocks, penny stocks are not traded on international stock exchanges rather they are traded in local stock offices. Such stocks belong to small companies going public, but having limited capital investment. Unlike major stock exchange alerts, which are available on newsletters and media news as well as stock market, the penny stock alerts are available in limited amount and that too via local newsletters and local market. But the authenticities of such alerts are doubtful since the penny stock market is highly speculative in nature and the information is window dressed by key players or agents in the market.
Reliability of Alerts on Penny Stocks
One of the major questions that are prevalent in the penny stock trading is, whether to believe or fall for a certain piece of information or not. This has posed a major threat in trading of such stocks. The very innate ability of penny stock is that they are traded for speculative motive only. This implies that unlike major stocks that are traded for raising capital the penny stocks are floating the market to earn money out of gambling with such stocks. And because of this reason the penny stocks are not listed on major stock exchanges. But caution is the word, investors investing into penny stocks need to be very certain and careful before believing a certain piece of information and investing on its basis.
There are certain elements called the manipulators or agents in common language that window dress as well as spread false information to lure in investors. These manipulators themselves first buy penny shares in millions and stock them. Later they spread the news of inflating prices of these shares with the help of newsletters, emails as well as local ads. The motive of such agents is to speculate the prices of penny stocks and earn huge money for themselves. The investors who fall prey to such information are the ones who suffer losses.
Despite of the above facts, there are many investors in the penny stock market. Although making investment into such stock is a very risky yet there are people who tend to gain huge through speculation in this area. They do not rely on the penny stock alerts floating in the market rather they do their own research and are in contact with the base company. This leads them to a bit safer investment deal. They have good hand on knowledge of the market and they themselves predict future. Based on such prediction they buy and sell penny stocks while making money for themselves on the way. These investors are clever and know how to make use of any piece of information. But there are those who are not such clever in dealing and they are the ones who suffer losses if they invest in such stocks. There is a huge margin that can be benefited from when trading in penny stocks. And since they are such volatile the government is making rules and policies that govern the trading of penny stocks as well. This would make the penny stock market a bit safer for investment for local or common people like all other stock exchanges.