| The problem you face as a new investor trying to | | | | weeks but you may have to commit to at least a 6 |
| purchase cheap penny stocks is the same as any | | | | month holding period to show some success. This is |
| investor, large or small. Which stocks to buy? Trading | | | | crucial. You may find some quick profit opportunities |
| penny stocks cheap is very much like trading any | | | | but the savy investor is prepared to wait for a 6 |
| stock on the major stock market. You have to | | | | month or longer period to make better profits. |
| examine the fundamental and technical components | | | | The U.S. Securities and Exchange Commission (SEC) |
| of the stock just like any other company. | | | | requires your broker to give you a document |
| Although not without risk, cheap penny stocks that | | | | describing your risks and obtain your signature |
| are fundamentally sound are going to involve less risk | | | | showing you are aware of the risks in investing in |
| than just picking stocks at random. Some of the | | | | penny stocks. You should read and understand it |
| largest stocks on the Dow once were penny stocks. | | | | carefully before you sign it. |
| These stocks today cannot offer the same potential | | | | In addition to obtaining your signature, the SEC |
| for growth and profit that a sound penny stock will | | | | requires your broker to wait at least two business |
| have. | | | | days after sending you this statement before |
| Penny stocks can be very high risk and volatile | | | | executing your first trade to give you time to |
| investments. In fact, 90% of inexperienced "day | | | | carefully consider your trade. |
| traders" will usually lose about 90% of their | | | | Penny stocks can be very risky. |
| investment at least 90% of the time. | | | | Penny stocks are low-priced shares of small |
| However, by selecting fundamentally sound small | | | | companies. Penny stocks may trade infrequently |
| companies with great reports, a solid product and | | | | which means that it may be difficult to sell penny |
| good management team, that have hit the bottom | | | | stock shares once you have them. Because it may |
| of their 52 week trading cycle, you can minimize your | | | | also be difficult to find quotations for penny stocks, |
| risk and maximize your profits. | | | | they may be impossible to accurately price. Investors |
| You must be prepared to be patient. The average | | | | in penny stock should be prepared for the possibility |
| time to hole the stock can be from a week to over | | | | that they may lose their whole investment. |
| a year. A lot of stocks will show a profit in 2 to 10 | | | | |