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Penny Stock Investing

This article is aimed at looking at the real truth about penny stock investing. Penny stocks are suitable investments for experienced traders who are looking to earn a high return with the understanding that a very high level of risk is being undertaken.

Many penny stocks end up worthless or close to worthless. However, some penny stocks do very well. Gains in excess of 100% over the course of a year can be quite common amongst the successful penny stocks.

A look at a successful Penny Stock in 2009

Let's take a look at a company called Sirius XM Radio Inc. As their name suggests they are a satellite radio provide in the US.

Their stock performed exceptionally well in 2009. This penny stock really has been a success story. It started the year around 12 cents and by mid October was priced around 60 cents. This is a whopping 500% increase in less than a year. You can take more in depth view of this stock at google finance.

So as you can see, if you pick the right stocks, they can grow hugely, even in a recession.

Is a Penny Stock Investment gambling?

In my view the answer is, "it can be". I will explain. If you don't really put any effort in to researching a stock or just pick one at random, then yes, you would probably have better odds at your local casino playing roulette than you would trading penny stocks.

However, if you do your research, either through technical analysis or fundamental analysis you then have the opportunity to put the odds in your favor. In this instance, I personally view penny stocks as a high risk investment and not gambling. Of course, you are free to disagree.

Where to find penny stocks to invest in

The best way to find penny stocks to invest in is to use a stock screener. There are many free stock screeners out there. My favorite free screener is the one from google.

If you click on this link, it *should* automatically take you to there with everything already set up to view penny stocks.

However, if it doesn't, it's very easy to do manually. You just need to select the "Add Criteria" link, then select "last price". The Last price option will then appear you need to select "0" as the minimum and "5" as the maximum. That will list all the penny stocks priced under $5.

Penny Stock Broker

When penny stock investing it's very important to have a good broker. The best broker I have found for penny stocks is definitely Zecco. If you would like to look at brokers in more detail, be sure to check out the Penny Stock Brokers page.