Penny Stock Basics - Online Penny Stock Trading

The Life Of The Penny Stock Pump And Dump

The penny stock pump and dump scheme is the longest running pink sheet scheme still in practice today, but it is difficult to control because of the way it works. Since the barrier to day trading has been reduced by advances in computers and internet availability more people are becoming addicted to trading stocks and making money in this market. The newcomers to day trading are often more susceptible to manipulation because they are often following technical trading patterns laid out in books, but even more experienced traders can get caught up in these schemes.

Here’s how the penny stock scheme works:

Can You Make Money Shorting Penny Stocks?

by Charles

Penny stocks are known to be risky investments. The old adage that the stock market generally grows doesn’t apply in the penny stock universe. Shorting stocks is betting a stock will fall instead of rise in price. What essentially happens is you sell a stock you don’t own for money, but you owe the stock back in the future. You simply wait for the stock price to fall and then you buy the stock and keep the difference. While you don’t want to short stocks that sit stagnant or slowly rise over time you can improve your odds with a few simple tactics.

How Penny Stocks Are Different from Other Stocks

by Charles

Stocks are simply a piece of the pie — a small piece of a corporation. They can be purchased individually from a person who owns the stock or they can be purchased from a market or exchange. In this sense all stocks are the same. Where the term penny stocks comes in and how they are different from what most people think of as stock is the level of safety.

With only so many resources available the Security Exchanges Commission (SEC) can only audit a certain portion of companies every year. While the companies wishing to be on a major exchange pay for their own independent audits as part of being on the exchange, smaller companies do not.

Why Day Trading Penny Stocks May Be Your Best Option

by Charles

Day trading involves sticking with stocks for the shortest period of time possible to make as many small profits as possible. Day trading often carries a stigma of wild gamblers or genius big shots playing or manipulating a system to make millions, but this usually isn’t the reality of this profession.

In reality the day trader is someone who knows how to make a consistent plan that has proved itself and stick with it. Most day traders prefer highly volatile systems like the options and futures markets, but there is plenty of room in the realm of day trading penny stocks. Here are some reasons you should or shouldn’t day trade penny stocks.