How to Pick Good Penny Stocks

by eHow Contributor, studioD

The hardest part in finding good penny stocks is the research that you must first complete. To pick good penny stocks, you have to learn how the system works, what to look for in business, and how to avoid scams. With a little understanding and investigating, you can moderately pick good penny stocks.

Do a lot of research to pick good penny stocks. Look into as much information about prospective companies. Does a struggling new company offer a product or service that is beneficial that they will make profits? Does the company provide financial information about their business? Choose good penny stocks that share their financial information. This type of investment is traded on the Over the Counter market (OTC) where companies are not required to share financial documentations. You will not find good penny stocks on larger markets such as NASDAQ and other well known markets. They are traded completely different.

Learn how to pick good penny stocks by reading how the Over the Counter market works. Traditional and well known markets trade over just about every type of communication, whether it be your phone, internet, or through a broker. In this type of market, good penny stocks are traded through a dealer or network that can be considered a middle man.

Read informative newsletters and information on how a business moves from the Over the Counter market to a main exchange to choose good penny stocks. Good penny stocks have to be able to meet listing requirements before they are allowed to move on the NYSE or NASDAQ markets. According to, Good penny stocks have to meet exchange requirements, as well as continue to meet them to be part of major markets. Learn what the requirements are for major markets to pick good penny stocks. You will want your investment to someday (hopefully as soon as they can) move to major markets.

Avoid getting scammed out of your investment when picking good penny stocks. Insure that the company or person that you're dealing with when choosing good penny stocks is not a sham. Contact the better business bureau or your local chamber of commerce for direction before choosing a company. A lot of people when picking good penny stocks will fall victim to people or companies that promise that they will make you rich. Investigate who your turn your money over to before easily giving it out when you have picked good penny stocks.


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