Penny Stock Investing

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Penny stock scams

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Penny stocks are usually not traded on big stock exchanges like NASDAQ and New York stock exchange because such exchanges have certain listing requirements which penny stocks do not meet like a certain number of shareholders, minimum assets required, filing of financial reports timely etc. In Canada there are thousands of penny stocks available on exchanges like the TSX Venture Exchange (TSX-V). Before reading any further, read the dangers of penny stock scams.

The beauty of penny stock investing lies in that you start small with only a few dollars and later with time these penny stocks can become mid size stocks thus making people wealthy. These penny stocks initially trade pennies per share. Penny stocks have greater price volatility thus the gains and losses are much quicker. Due to this factor the investor is drawn towards junior markets because it has the potential to make them very rich while minimizing the loss.


Most penny stocks are the technology companies that initially sold shares to raise capital for a particular venture. Now if that venture later becomes successful the penny stock investor automatically benefits from it and this is where the whole catch is. Before investing it’s not just potential earnings that are to be studied but complete financial statements should be analyzed. Other factors such as effective management, improving trends should be taken into consideration. Analyzing key financial ratios will give some insight whether the company share prices will increase in the longer run or not.

Before going for penny stock investing analyzing and properly researching from your end about hundred companies would be a good idea as out of those hundred examined two or three would be having the hidden potential of higher stock prices in the future and proper research from your end could give you some clues about this. While analyzing other factors such as the market conditions, the economy should all be taken into account.

Further Reading: Penny Stocks Canada: More general info for the penny stock investor in Canada.

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