When one talks about trading or investing in financial markets, one considers a wide range of products. From currencies, metals, commodities to stocks of various companies and many in between. The financial market has always grown with time, advancing day by day with the best technologies and instruments.
Through this article, readers will have a brief view of what penny stocks are that should be bought for a profitable investment. Trading penny stocks in the market requires a lot of effort as traders have to analyze, study, and research for making accurate predictions.
So, let’s understand the trade of penny shares and have advanced knowledge of financial trading.
What are Penny Stocks?
While reading the word, most of you must have considered penny stocks being a part of the stock market. Which, to some extent, is correct, as these are the securities that are traded in the stock market. The penny stocks are a form of asset that attracts minimal pricing, offered by the companies having a low market cap. This gives it another name, nano-cap stocks, which is based on the capitalization of the company.
The market capitalization of a business/firm is determined on the basis of the product’s current price for the stock and its outstanding shares. On the basis of this, the companies are indexed in the stock exchanges. Some of the famous stock exchanges include New York Stock Exchange, NASDAQ, and the London Stock Exchange.
The list of penny shares is found in lower sections of the stock exchanges or even with the less known stock exchanges.
If we describe penny stocks in simple words, these are stocks of small companies that trade in the stock market for less than $5 per share price. Although it is not necessary that the penny stock will trade on a low stock market, these could trade with many known stock exchanges of the market.
Trading Penny Stocks
Trading penny stocks in the financial market is available in electronic form. Traders can buy and sell these via over-the-counter transactions using the OTC Bulletin Board (OTCBB) or through private OTC markets. In addition, the quotations in the trade are also done electronically. Consequently, we can say that the trading of penny stocks could be referred to as OTC penny stocks trading.
Earlier penny stocks were considered as stocks of any company that are traded at less value than one dollar per share. However, with time the U.S. The Securities and Exchange Commission (SEC) modified the definition, including the shares traded below five dollars.
SEC is an independent U.S. federal government agency that is responsible for protecting investors in the process of maintaining an orderly functioning of the stock market.
Traders usually take penny stock as part of smaller companies that are traded infrequently among the masses. So, it is believed that penny stocks lack liquidity in the trade. Traders, therefore, find it difficult to sell the penny stock in the market as there may not be any buyer when required. Hence, no appropriate price for the penny stock is reflected in the market.
The low liquidity of penny stock also calls for wide bid and ask price quotes, small company sizes, and high speculation. The risk of losing is high in the trade due to fluctuations and uncertainties in the stock market.
Day Trading Penny Stocks
Penny stocks trading could be done using various techniques. One can prefer trading through short selling, day trading, or swing trading penny stocks. The appropriate one is selected based on the penny stock of the company and the trading environment.
In day trading, particularly traders buy and sell the penny stock for a whole day. They can buy a single penny stock or multiple as per their choice. Day trading allows them to have short-term positions that could last for a few minutes, hours and end within a day.
Investors have to simply open their trading accounts with a reliable and regulated broker that offers penny stocks. Next, they fill in the formalities required with a broker, such as information of experience, address details, employment, etc. They deposit funds and buy the penny stocks that they find have a bright future in the trade.
Day traders can go for brokers such as ABInvesting, which has all the required facilities with the best penny stocks to buy now. The services like trading platforms, tools, technical analysis, expert advisors, indicators, etc., all are helpful for predicting and having profits.
NYSE/NASDAQ Penny Stocks Trade
Penny stocks are traded through OTC, which means that these are not listed with NYSE or NASDAQ exchange. Penny stocks are of the companies that are not required to adhere to strict financial instructions of the major exchanges. For a company to be listed with these stock exchanges requires a transparent financial system with stocks above $1.00 per share price.
Therefore, it is advised that investors avoid OTC penny shares. The companies that do not provide complete financial documentation do not have stock above $1.00 per share price and are in bankruptcy trade in OTC. This could be risky, and traders may face huge losses.
Moreover, the lack of liquidity and regulations requires buyers or sellers to have good experience for earning profits. Traders should go for penny stocks that are listed with NYSE or NASDAQ. Such penny stocks have the ability to move intraday and are cheap enough for high positions.
Learning about Penny Stocks
Traders have various mediums to enhance their knowledge of penny stocks trading. They can learn about the stock, stocks to buy, stocks to watch, and other stocks that could turn out to be profitable. Usually, traders prefer stocks listed with an exchange, but what about the new investors or the beginners.
Such traders have a low knowledge base, and to aid them, financial brokers like ABInvesting which have well-deserved reputation offer services given below:
- Streaming video
- Educational stuff
- Research tools
- Analysis tools
- Other than this, traders can also refer to articles, blogs, YouTube channels to enhance their understanding.
Best Penny Stocks to Buy Now
Penny stocks represent cheap price stocks listed in the stock market with high prospects of returns. The low-value stocks of small companies could do wonders if investors or traders consider the best penny stocks in the U.S.
The best penny shares to buy now in the U.S. that would make a profit, have high growth potential, and are appropriate stocks for trading are mentioned below:
- Lucky Block (LBLOCK)
- Snipp Interactive (SPN)
- Taseko Mines Limited (TGB)
- Transocean Limited (RIG)
- Exela Technologies (XELA)
All the above are a few penny stocks of companies that have been in the news recently and have been going well. Traders can go for buying penny stocks from these and have high profits.
The five penny stock companies are discussed in detail for a proper overview for the readers. So, let’s begin:
Lucky Block is not a stock but a cryptocurrency that is the most traded penny stock in the news. It has massive growth prospects and has a token represented by LBLOCK. The Lucky Block is a gaming platform that has gained popularity in the tech space. The company looks to bring new changes to online games and make them more user-friendly.
Anyone can access the platform globally, hence part of the massive trading of penny stocks. The stocks of LBLOCK use blockchain technology to improve transparency in trade. The transactions are recorded, making it simple to check and track. In addition, everyone has access to game records.
The valuation of crypto has skyrocketed from $0.0052 to $0.0092, a jump of around 76.9%. As a result, traders can invest in this penny stock for high profits and low risks.
Snipp Interactive Inc.
The most promising stock to watch in penny stocks trading is Snipp Interactive. It is a Canadian promotion and loyalty technology company. Traders can have marketing, loyalty, and rebate solutions with the firm across many countries. The value of the company’s stock is $0.18, with an impressive performance over the years.
It was founded in 2007 and currently has a growth percentage of 136.8%. Moreover, its high-tech clients such as Starbucks, L’Oreal, etc., make it a great advertising firm. The bookings of the firm are high, a healthy backlog of $10 million is recorded in 2021, and the revenues are also high.
Therefore, the company is among the best penny stocks to buy now.
Taseko Mines Limited
Taseko Mines is a company that works in the copper sector; it is said to be an explorer in the United States and Canada. It is so as these are stable copper extraction regions. The benefits for the firm are many as cooper is an attractive metal right now with a high price. Global supply chains are tightening due to the dollar retreating in value. Thus, the copper price has increased in value.
The product is used in many electronic devices and infrastructure, making it part of exponential growth in coming years. The revenue of the company is above $132.6 million, an increase of 171% from its second quarter. Traders can buy stocks of the company and have good profits.
Transocean Limited is based in Switzerland and is among the world’s largest firms. It is the best offshore drilling contractor based on revenue. The stock of the company is high at 14.3% and has a per-share price of $5.03. Traders can go with the stocks of this firm as they can have good returns from penny stocks.
Moreover, it has been doing great business and has announced contracts to build five new rigs. These rigs could bring an incremental backlog of $87.7 million. The prices that it would charge for deployed vessels is great news for prices to increase.
So, traders should give thought to buying the stocks of Transocean limited for being successful traders.
A Texas-based firm, Exela Technologies operates in automation. It offers services and softwares for business operations like accounting, human resources, and others. The company is in an expansion period with the best tech solutions. Traders can buy penny stocks as they can have a good price in the trade.
In 2021, Exela expanded its partnership with MasterCard in Europe. This supported the automation of 11 million payments in Norway. The revenues are $279 million, and analysts expect them to grow to $350 million in 2022.
The fundamentals are strong, making them prime penny stocks to trade right now.
Penny stocks are a good choice for investors to trade, as they can have small investments and high profits with low risks. The article has detailed all the aspects of penny stocks. One can select from the best five penny shares given and make good money.
The article also mentions the best stock exchanges like NYSE and NASDAQ, which one can look for penny stocks to trade. With this, another important thing is that the broker should be selected with all aspects judged to make informed decisions and have low risk and more money.