Penny stocks are mostly traded out of the stock exchanges. The one fact about the penny stocks is that they are indeed a risky investment and as an investor interested in them, you are advised to have a good if not conclusive knowledge of the risks that are potent to these investments. In as much there is a degree of risk that always comes with every kind of investment in the financial market, for the investment in penny stocks it will be suitable for you if you indeed have some good amounts in disposable cash for the risks therein.
There are those brokers or dealers who trade in them and you as well need to understand the financial terms that go along with the investment. All said, we must emphasize that if you are actually considering your investment options, think of learning more about this form of investment. If you are looking for more information on this form of investment, you can surely get this from the message boards and the newsletters.
The first thing about penny stocks is that they are very speculative when it comes to stock trading. These stocks are often done over the counter and they are controlled by the SEC laid out rules and guidelines. There are those rules which have been laid down by the U.S SEC, the Securities and Exchange Commission, for the operations of the securities trading market and as such if you are thinking of getting into this trade as a beginner investor, you will need to bear in mind to be well tipped on these rules and regulations.
The SEC has set out as a mandatory rule to be complied with that anyone who goes into Penny stock trading must ensure that they are first registered with the Broker-dealer registration compliance. As an investor going into the Penny stocks, you are to submit a written request for the same to the brokers or dealers and after this is done, you are to be approved by the same brokers or dealers. The SEC further stipulates that the investor should be given a document detailing the risks involved in this investment. The other stipulation as per the guidelines by the SEC is that the rates of the stocks as they currently are in the market be revealed to the investors intending to purchase them and as well the commission that will be due to the brokers or the dealers must as well be told to the investor by them.
If you at all intend to invest in the stocks, you are generally given the advice to have a thorough look at the risks involved with them before you are finally enrolled in them as an investor.