Finding Penny Stocks On NYSE
In the past decade there has been a major explosion in the buying of penny stocks online. This is due to the fact that the Securities and Exchange Commission (SEC) has made it possible for the stocks of small cap companies to be traded on an electronic platform called Nasdaq. This makes it much easier to execute orders and it reduces the amount of paperwork that brokers need to do in order to ensure that the client’s transactions are properly covered. Also, because it is Nasdaq, there are some reliable international exchange providers that handle the day to day supervision of the marketplace.
However, even with the convenience of buying penny stocks on NYSE there are certain risks that investors should be aware of. First of all, like any other investment there are inherent risks involved with these types of securities. For example, one of the main concerns that many people have related to liquidity. A penny stock is a lower cost form of investing and therefore there is not as much volume or liquidity to speak of. This makes it more difficult to achieve a proper average price for the shares of a company.
Another related issue relates to the ability to attain a fair value of the shares. Many traders believe that the trading cost associated with penny stocks warrants paying a premium. However, this is not necessarily the case. Penny shares are much less liquid than shares on larger exchanges so this can be an issue if a company does not fit into your standard equity index. Also, many large cap companies trade on their own in the open market so NYSE doesn’t have the power to pull the listing of such a company. There are also occasions when a company goes through an initial public offering (IPO) and becomes too hot too fast before the public ever gets a chance to see what they have done.
There are several ways to determine the value of a stock through various programs and reports. The most common and reliable is the P/E ratio which compares the market value of the stock with the Price to Earnings (PE) ratio. The P/E ratio looks at overall earnings per share (EPS) versus the market cap. You want to find a market cap that is low but you must ensure that the EPS is high enough to justify the stock’s market value. One negative aspect of looking for a low P/E ratio is that many technical analysts will use the number of shares outstanding to determine this so it may be misleading.
It’s important to remember that anyone can invest in penny stocks and as such, it is possible for you to lose money. This is why it’s so important to conduct research on any investment before you purchase and learn as much about the business as possible. Doing so will help you avoid costly mistakes and allow you to focus on building a solid foundation for your investment portfolio.
Finally, you should be very careful when choosing your stock broker and service. Many people end up using a stock broker or investment firm that offers penny stocks and NYSE listed securities. Unfortunately, not all firms operate ethically or transparently. So it’s important to always make sure you are dealing with a reputable, well-respected company. That way, you can feel confident that you are working with someone who is providing fair trades and not just out to make a profit.