Penny stocks are mostly transacted outside the normal stock exchanges like the NYSE or NASDAQ. They have a number of risks and for one who wishes to invest in them, they are better advised to know the risks attending 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.
There are those brokers or dealers who trade in them and you as well need to understand the financial terms that go along with the investment. 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.
Looking at their performance in stock trading, you will realize that they are some of the most speculative kinds of stocks. 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.
The SEC has set out as a mandatory rule to be complied with that anyone who goes into Penny stock trading must ensure that they are first registered with the Broker-dealer registration compliance. As an investor going into the Penny stocks, you are to submit a written request for the same to the brokers or dealers and after this is done, you are to be approved by the same brokers or dealers. The SEC further stipulates that the investor should be given a document detailing the risks involved in this investment. The other stipulation as per the guidelines by the SEC is that the rates of the stocks as they currently are in the market be revealed to the investors intending to purchase them and as well the commission that will be due to the brokers or the dealers must as well be told to the investor by them.
The best advice one can receive as for the investment in the penny stocks is to ensure that they have evaluated the risks involved in them before you finally choose to put in your money in them.