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Penny Stocks are named that way for a reason. While each one of us starts dreaming about investing in the next big thing, the thing is our chances are slim on finding such a success story. Penny stocks are not treated any differently than any other stock. Penny stocks are always fraught with high risks. Nonetheless, your chances of success would be greater with penny stocks.

Penny stocks are very appealing to investors as they are so inexpensive. For a small amount of dollars, we can buy literally thousands of stocks. Penny stocks are a great investment opportunity, if you are willing to take more risk than most investors as these stocks are the ones with the highest risk . The simple description of penny stocks would be that penny stocks are all stocks that trade for less than $1, or sometimes up to $5. Penny stocks are usually issued by small, relatively unknown companies and lightly traded, making them more prone to price ma nipulation than larger, better-established issues. They are, in short, a gamble.

Companies that offer cheap stock are not the same companies you find in the blue chip market. On the contrary, they are often very risky investments. Companies listed on the Second Tier and Third Tier markets have less stringent requirements especially in relation to disclosures and filling of operational reports with the regulators and are thus not as publicly scrutinized or regulated as those on the first tier board. Furthermore, much of the information available about micro-cap stocks is typically not from credible sources. Companies plagued by financial scandals also tend to trade in heavy volumes over the counter even after delisting from a major exchange. HealthSouth shares dropped to mere pennies in 2003 but are now trading in the $5 range amid a turnaround.

Investors should also report any unusual activity that pertains to their accounts that might be potential securities fraud, so an investigation can be done. If an investor becomes a victim of securities fraud, he or she should start immediate litigation. Investors saw that delisting penny stocks would make the shares almost worthless. With no market to trade them, there would be no one to buy them. Investors must clearly understand that although penny stocks produce some fantastic profits they are even more vulnerable to market swings than their heavier weight cousins. Technical analysis tends to remove the noise and market over reaction.

Pickle Stocks hopes to see a lot more news of acquisition coming out of Seaway in the near future, since they're in the business of that. As long as they continue to do so, there will be many points of exit and re-entry. Pick a reasonable amount as your risk premium. Use an up to date trading plan.

Price swings can happen quickly and frequently. These stocks are subject to heavy promotion and manipulation. Prices can be reduced to levels reached over 16 months ago. Prices go up when interest rates go down, and vice versa. Preferred dividends are not a contractual obligation of the issuer, however.