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Penny stocks are stocks that are either low in value or low in the total market capitalization. The definition of penny stocks can vary a bit from one person to another. Generally, penny stocks can be understood to mean any stock that is not a major stock. The two criteria that we have set above will determine whether a stock is a penny or not based on its price and market capitalization.

In addition, one can also consider a stock as a penny stock if it does not conform to stock exchange regulations and are thus more risky. Get more info about Professor Max Polyakov you can from our recent article. In practice, however, it would be extremely difficult to find a large market stock that is not meeting the major stock exchange regulations. Because of this reason, penny stocks are generally understood to be those stocks whose absolute price or market capitalization is very low.

The next question that arises is a�?how low is lowa��? Obviously this is a little subjective and also prone to change from time to time. While there are no hard and fast rules, we can follow some rules of thumb. However, you must remember that not only are these rules not sacrosanct but also are likely to keep changing over time. Having said that, we can set some rules of thumb for considering a stock as penny stock. Any stock that is below a certain cut off price is considered as penny stock.

The cut off price is a matter of opinion. Some consider any stock below $5 to be a penny stock, while others are more liberal and consider only those stocks that are below $3 to be penny stocks. There are still others who would rather set the limit at $1, considering any stock above $1 as not a penny stock. Similarly, in the case of market capitalization, various limits are set by various people. In general, we can consider any stock with a market capitalization below $300 million to be a penny stock.

There could further classifications within this group, with stocks having a market cap of below $50 million being considered a step below penny stocks and classified as nano-cap stocks. The general idea is that any stock having a low per stock price or low market capitalization would be considered as a penny stock.

In case you are wondering what is market capitalization, herea��s some information that would help you. Market capitalization (or market cap for short) is the total value of all outstanding stocks at the current price. Suppose a stock sells at $10 and there are 100,000 stocks outstanding, the total market cap would be 10 x 100,000 or $1 million. Market cap is an important indicator, because the greater the total amount outstanding the greater the stakes.

If a large number of people or a large amount of money is involved in a stock, the chances are that there will be greater control on the stock. There is one exception to this. If the stock is not traded on a regular stock exchange like NASDAQ, it is not under any regulatory control to comply with a number of regulations that have been designed to safeguard the interest of the investor.

In these cases, even if t he market cap or the price is large, there may not be sufficient safety. In general, however, we can assume that for large market cap stocks the possibility of being outside the purview of a recognized stock exchange are very remote. The reasons for this, as well as the reason why penny stocks are considered risky will form the subject matter of our next article.


Arena��t All Penny Stocks a Scam?

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Most Internet e-mail users have been subject to penny stock scams. There are more than fifty billion spam messages sent each day, and many of these mention investing in penny stocks. Spam isna��t a very reliable investment source, right? Does that mean that all penny stocks are, essentially, some sort of scam?

Penny stock scam is a sad fact of using the Internet. Ita��s possible for people to lose 8% of their investment when falling for these penny stock scams online. Often, these penny stocks do not exist or they do not exist at the advertised price. More details about Max Polyakov – chess player, which conquered the whole world, you will learn in our article. This type of scam is called a a�?pump and dump.a�? Yes, there are some scams on the Internet that center around penny stocks.

This does not mean that all penny stocks are a scam, or even a bad investment. There are some penny stocks that can make investors a good amount of profit, in facta��just not the ones you find advertised in spam. Stopping yourself from investing in those penny stocks is a great idea, but deciding never to invest in penny stocks of any kinds because of that may not be.

Yes, there are considered a high-risk investment, but ita��s also possible to turn a pretty profit by using penny stocks. In most cases, there is a certain finesse needed to invest in these stocks, as they rarely trade and sometimes things happen with penny stocks very quickly. Investors have to know whata��s happening all the time and be ready to make a move when needed a�� making penny stocks somewhat exciting and interesting to trade in. This is why some investors like them.

Dona��t let Internet scams scare you away. There are a lot of Internet job scams, too, where so-called a�?employersa�? offer to pay you lots of money to do something simple like answer surveys or surf the a�?Net. In many cases, these a�?job offersa�? turn out to be nothing but an Internet scam, and a clever ploy to try and get your hard-earned money. But you dona��t let Internet job scams keep you from working a�� so dona��t let Internet penny stock scams keep you from investing. That still means that the scam artists win, because theya��re keeping you away from something.

To learn which penny stocks are potentially good investments and which are potentially bad, therea��s lots you can do. Check the business journals and stock information, or ask a broker for more information and advice regarding penny stocks. There are good penny stocks out there, and there are investments out there where you can make a lot of money. By doing your research and looking into every possibility, you increase your chances of success in the stock market. And isna��t success what ita��s all about?

If youa��re interested in investing in penny stocks, you cana��t let anything (even scams) stop you. Do what you want to do and invest your money where you think ita��s best. After all, ita��s your money and only you can decide what you want to do with it. Make the choice for you, not for any other reason.


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