Penny stock investing is a great way to make a part time or full time living on the side. There are many opportunities in the stock market, but penny stocks provide some of the greatest. There is no other stock you can buy that will give you 500% returns overnight. However, it’s also easy to lose money with penny stock investing.

Stocks are usually categorized by the market capitalization and the total price given by the market players. You will often hear about terms like small cap stocks, medium cap stocks, large cap stocks, etc. Any share that with a market cap of up to $100 million with and a maximum price of $5 are often called penny stocks.

Penny stocks are generally the opposite of the blue chip shares which can run very expensive per each share. Penny stocks are not traded through the major stock exchanges (because penny stocks don’t meet the stringent restrictions required to be listed in the major exchanges), but from over the counter by brokers. However, you can trade penny stocks through online stock exchanges and through online brokers.

Why don’t the major stock exchanges like the NYSE and the NASDAQ carry penny stocks? Because they like the big, showy companies with lots of money and publicity. The big stock exchanges take advantage of the reputations of these big companies, cashing in on the high turnovers of stocks that center around these companies. The major stock exchanges also require stringent terms to be met by stocks – terms that penny stocks don’t meet.

By contrast, penny stocks are primarily unlisted stocks and are usually traded outside major exchanges – though you can find listings in financial websites and magazines. So, penny stocks are fairly nondescript stocks that are passed around from broker to broker, lacking the attention that bigger stocks get.

Hence penny stocks are more risky. There is not much in the way of company history or major CEO’s from which you can track the stock’s track record.  It’s hard to predict where a penny stock will go. It could multiple in value dozens of times or it could crash to virtually nothing. This makes penny stocks a target for scammers.

Penny stock investing may seem risky, and it is, but there are also great rewards to be gained if you play it right. Penny stocks often turn out huge, unexpected returns if they happen to rise because of the fundamentals of the company in questions, rather than market manipulation.

Why do penny stocks sell for so cheap? Cheap penny stocks occurred because they are fundamentally undervalued; unlike regular stocks, they don’t have much in the way of market support. If you get cheap penny stocks, they stocks could shoot up in the future if the company gains public spotlight. More then a few millionaires have been made overnight because of penny stocks.

So how to go about penny stock investing? The first thing you need to do is either get a stock broker or join an online stock exchange. Probably the easiest way for individuals who want to get involved with penny stock trading is to use an online stock exchange rather than a broker – but this is an individual choice.

Penny stock investing, believe it or not, is actually one of the best ways for first time investors to learn the ropes of the stock market. This is because you can get stocks that are literally pennies. Any losses that are incurred are very low because of the low dollar amount. As long as you use disposable income and play it safe, you can learn quite a bit.

Check out these other penny stock investment guides:

• Day Trading Penny Stocks
• How to Trade Penny Stocks
• Buying Penny Stocks
• How to Buy Penny Stocks
• Buying Penny Stocks Online
• Investing in Penny Stocks
• Cheap Penny Stocks
  

One you get some more experience, penny stock investing can make you a lot of money. The best way how to buy penny stocks is to learn key some penny stock tips. There are many websites that offer penny stock training and tips. Some are free and the more compressive stock training programs are not. However, by actually getting some training in how to buy and sell penny stocks, you can make a lot of money though penny stock investing.