Learning to Invest

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Although some people would like to invest on the NYSE or NASDAQ, they perhaps do not consider that they have enough money to do so or, they may think that they are too inexperienced to make such large investments. Either way there is an option that these people could consider and that is to start trading in penny stocks. There are websites that specialize in penny stock trading and so visit the website and learn more but basically, penny stocks are shares in small companies which are too small for their shares to be featured in the larger, more well-known stock markets like the NYSE or NASDAQ. These small companies are not featured on the larger stock markets because the price of their shares is often just pennies and not dollars but they are still shares and so are just as susceptible to fluctuations in value, just as the larger shares are. This means that just with bigger shares, you try to buy them when they are relatively cheap and then sell them as their value increases and thereby make a profit.

Although it is possible to make large amounts of profit and penny stock millionaires do exist, 90% of penny stock investors end up losing their investment. One of the reasons why so many people fail to make a profit from penny stocks is because the small companies do not come under the rulings of the Securities and Exchange Commission which the larger companies on the NYSE and NASDAQ do. One of the SEC rulings is that any company that wants to trade its stocks must first divulge certain information which will become available to potential investors. As small companies are not bound by such a ruling, it is sometimes difficult for a potential investor to learn anything about the company they would like to invest in. this has resulted in some of the investors on the larger stock markets to referring to penny trading as more of a gamble than an investment.

Starting with just small investments though, does appeal to many people and even if it is a gamble, like most other forms of gambling, the ones that do make money can make very large amounts. It must be said though that as there is much uncertainty in penny stock investing with only 10% actually making a profit from it, if you are considering starting to trade in these, you should perhaps be prepared to lose your investment. There are many people though that although not becoming millionaires, have made enough by penny trading to be able to step up to trading in the larger arenas like the NYSE and NASDAQ and their experience in penny trading has helped them once they are there. When all is said and done though, even the largest corporation today, did at one time start small and if anyone had shares in the company when it was small, could have made a lot of money on their shares now that the company is big.