If you are interested in making a living in penny stocks then you will first need to ask “what are penny stocks?” The answer to this question is going to vary depending on who you ask. Some people say that a penny stock is any stock that is sold for under $5, while others claim that it is a stock that sells for under $1. No matter which definition you subscribe to penny stocks will generally be offered by small cap companies. The attraction that penny stocks offer to investors is the potential to make a large profit in a short period of time. Unfortunately, people who are attracted to penny stocks don’t take into consideration the high risk rating of penny stocks. Penny stocks are generally rated as high risks because most of the companies that offer this type of stock are new to the stock market, and because of this they have limited liquidity, they may not offer financial reports for potential investors to review and there is a high risk for fraud.

If you are ready to accept the risks involved in investing in penny stocks then your next question should be, “where can I purchase penny stocks?” You have several options for buying penny stocks. First you can buy penny stocks online via an online stock broker. Secondly you can buy penny stocks through a stock broker.

After you have established where you can invest in penny stocks your next task will be to decide what type of investor you want to be. Most people who invest in penny stocks are day traders. This means that they will buy a penny stock one day and sell it as soon as it passes a certain value. This can be as quick as one day. Short term penny investors will typically hold on to their penny stock for less than a year. If you are looking for long term gains then you can develop a long term investment strategy and hold on to your penny stock for more than a year.

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How to Find Hot Penny Stock Picks

Check industry trends The most reliable way to find hot penny stock picks is to look for industry trend. Your goal here is to find a trend when it's just starting on its upward swing. That means find...