Penny stocks are mostly transacted outside the normal stock exchanges like the NYSE or NASDAQ. The one fact about the penny stocks is that they are indeed a risky investment and as an investor interested in them, you are advised to have a good if not conclusive knowledge of the risks that are potent to these investments. Though it is a fact that all kinds of investments in the financial markets, with the penny stocks it will be wise enough for you to go into it if you have a fair share of finances to put into it as there is a real financial risk that is attached to it.
The penny stocks are brokered or dealt through the agents-brokers and or dealers-and as such you will require to be versed with the terms that apply in this market for you to sail through it with success. Learn more about this form of investment if you happen to be looking for the optional investments that you may be up to as an investor. If you are looking for more information on this form of investment, you can surely get this from the message boards and the newsletters.
The penny stocks are actually known to be some of the most speculative kinds of stocks available for trading in the markets. These stocks are often done over the counter and they are controlled by the SEC laid out rules and guidelines. There are those rules which have been laid down by the U.S SEC, the Securities and Exchange Commission, for the operations of the securities trading market and as such if you are thinking of getting into this trade as a beginner investor, you will need to bear in mind to be well tipped on these rules and regulations.
First of all, as a trader getting in for the first time, you must bear in mind that you will be required to first have registered with the Broker-dealer registration compliance before buying or trading Penny stocks. A broker is to be served with a written request from the investor and after then they are to approve the investor. The SEC further stipulates that the investor should be given a document detailing the risks involved in this investment. The brokers and dealers are as well charged with the responsibility to ensure that they have told their clients purchasing or investing in the Penny stocks of the prevailing market rates of the stocks they intend to buy and as well let them know what percentage of commission they will charge.
Generally, it will be advisable for the investors to evaluate the risk factors that come with an investment in the penny stocks before investing in them.