Hot Stocks Under 5 – Crazy Enough to Buy Penny Stocks?

Hot Stocks Under 5

Penny stocks, microcap stock, or nano stock are the three main terms used for stocks trading under 5$ . Most traders will use these terms as interchangeable. There is no set rule to determine the name of these stocks by specific definition. A broader definition refers to the companies outstanding shares and their market capitalization. This is a more accurate way of finding a penny stock than relying on the 5$ rule.

One way to find the market cap of a company is to multiply the price of the stock by the amount of outstanding shares. This will help you find the monetary value of the shares at any time. These low priced stocks may be inaccurate in their share count, when calculating the market cap you may want to speak with the companies transfer agent and ensure you have the amount of outstanding shares correct. Penny stocks are traded on the OTCBB market by market makers. Commissions are made and there are tricks the market makers use to entice a trade. Here is a list of market maker (mm) signals. Hot Stocks Under 5

Brokers often receive a commission for facilitating the sale of penny stocks. They can also make money on the price spread and will be able to buy and sell shares at the best times to make the most money for themselves. This spread is the difference between the bid and the ask. Penny stock spreads can be very slim or they can be 25 to 35% difference in price. Furthermore, there is what is known as the inside and outside bids. If someone tries to buy or sell a lot of shares the price will change instantly. Penny stocks also may come with a mark up in pricing due to the brokerage holding the penny stock for a period of time therefore holding it through risk.

Trading microcap stocks is a dangerous process that can quickly remove the money from your brokerage account. Even with these problems and scams, many companies continue to trade these nano stocks for the chance at an enormous profit and a chance to be in on the bottom floor of a ground breaking company or product. The best way to find a company is to research on your own, use reliable sites and brokers to help you find companies but be careful, there is a lot of money to be made scamming these cheap priced stock traders. Always do your own due diligence. Hot Stocks Under 5

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