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Learn to Buy Penny Stocks

Penny stocks are a great way to invest, but they aren’t for the faint at heart! An essential understanding, with information provided in these articles, will help you get a firm grip on penny stocks before taking a blind dive into the market. Before you buy penny stocks, you’ve got to get a feel for the industry and follow some of the following criteria before considering a purchase.

If you want to learn to buy penny stocks, it’s fairly simple. First you would purchase shares of penny stocks through a normal stockbroker. Penny stocks are companies with share prices under $5 million.

Learn to buy penny stocks by consulting others, financial advisors and stock brokers. The Internet has a wealth of information. Here are the steps to learn to buy penny stocks:

-          Invest within your means, penny stocks are risky.

-          Penny stocks are volatile and risky. Make sure you understand this.

-          Get a year’s experience with normal stocks, first.

-          Know what to reject immediately.

-          Watch out for scams.

-          Avoid companies in heavy debt.

-          Compare price per share against book per share.

-          Buy at low multiples, ideally less than six times.

-          Limit tiny stocks to 5% of your portfolio and remember that it is a business.

-          Be careful!

Buying penny stocks is the easy part. A penny stock is a stock that is less than $5 a share. They are traded over the counter with pink sheets. Get a good newsletter to follow, and be capable of taking risks, and once you’ve found a system that works, follow it.