Many people have a desire to invest in penny stocks. But they are often unaware of the right way to approach such an investment opportunity. The investor needs to time his entry into the market correctly. Investors also need to select the right companies to provide them with decent returns. Otherwise, they might end up putting their money at considerable risk. The common investor does not have the time, or the means, to conduct the type of extensive research required for this work. Neither do they have the means to monitor the share prices with the regularity that it requires. It is for this reason that the help of professional investing firms are greatly sought after.

It is not just novice investors who approach these firms for their assistance. Even seasoned money managers and day traders with many years of professional experience, behind them take their help. They find it easy to allow these firms to conduct the research into a penny stock, while they carry on their daily business. Analysts at these firms normally try to gain mastery over a certain sector of the economy and some companies that work in them. This way they are able to give advice that guarantees success.

Penny stocks are also known as cent stocks in some countries. These are the common shares of small public companies that trade at very low prices. In the United States, these are shares that trade at less than five dollars a share. In the United Kingdom, these are shares that trade at less than one pound. The problem with penny stocks is that they are very volatile and are prone to frequent manipulation by promoters and unscrupulous traders. Investors who do not track the movement of these shares closely and do not have background details of these companies can lose money trading them.

These stocks are traded on over the counter bulletin boards or pink sheets. A list of these shares can be seen on a daily publication that is compiled by the National Quotation Bureau. It is easy to tell when a company is trading on the pink sheet because the stock symbol ends with the letters PK. Many of these shares are issued by small companies, start-up companies and companies with liquidity problems. Each investor has to decide for himself whether he wants to buy penny stocks or not. The investor should be prepared to take losses on the trades from time to time.

But once they have decided to trade, they should find a reliable online brokerage firm to help them with the transactions, since these shares are not traded on the major exchanges. Even good penny stocks need to be purchased in large quantities for the trader to make a substantial profit on his investment. The backing of a good investment firm is needed to identify all the hot penny stocks. Only they have the experience and the knowledge to help the investors navigate through these murky waters that are fraught with risks. Their assistance can ensure that investors to make decent profits.