If you cannot afford the large amounts that it costs to invest in the big stock markets like the NASDAQ or NYSE, you can consider small investments in what are known as penny stocks. You can start investing in penny stocks with as little as $50 and you will be trading in the same way as you would on the large stock exchanges but with a few differences. The main difference is that whilst the trading on the NYSE and NASDAQ comes under the control of the Securities and Exchange Commission (SEC), penny stock trading does not. This means that whilst a company trading its shares on the big stock markets is required by the SEC, to provide potential investors on information about the company, the small companies trading their penny stocks are under no such obligation and so often do not provide potential investors with any information. To some, this means that penny stock investors are investing in a way that makes them blind as to what exactly they are investing in or, put another way, they are gambling. Gambling though can be profitable which some penny stock millionaires will attest to however, as with most forms of gambling, there are more losers than there are winners. In the case of penny stock investing, it is estimated that only 10% of all penny stock investors actually make a profit whilst the other 90% lose their investments. As penny stocks are not traded on the large stock markets there is no official website for them but there are many websites that can tell you about them, how to invest in them and where to invest in them, some even giving advice as to which penny stocks to buy.
Just like the large companies, when a small company, perhaps with an overall worth of less than $50 million, wants to raise capital, they offer up shares in the company but as the companies are only small, each of their shares is worth less than $5 and perhaps even as little as just a few pennies. As the company does well or bad, its shares increase or decrease in value and so just as with other stocks, the penny stock investor must try to buy shares when they are cheap and then sell them as they increase in value. Sometimes these shares can jump quite high in relative value as even the largest corporations today, were once themselves small companies, possibly trading their shares in the penny stocks. As any investment in penny stocks though must be considered as being risky, anyone starting to trade in them , should be prepared to lose their money but hope that they too could become the next penny stock millionaire. Some people that have started by trading penny stocks, as they make a significant profit, have gone on to start investing in the larger stock markets with varying success. Trading in penny stocks will though give you an insight as to what it is perhaps like investing in the larger markets.