Amanda's note: This was provided by an online contact.

Penny stocks make the stock market accessible to traders with minimal funds. You don't need to invest thousands of dollars in these stocks to experience the thrill of buying, selling, and following trends. According to the U.S. Securities and Trade Commission, penny stocks are those that sell for no more than $5 per share. If you're new to the world of trading, working with penny stocks gives you a chance to get a feel for this landscape without risking it all.

The small investment required for penny stocks gives them a great return potential. The risk here is that most companies trading penny stocks are either lesser known, not yet established, or in financial trouble. If you see a well-known company selling penny stocks, this can be a prime indicator that its value is plummeting. It takes a certain amount of skill to identify the penny stocks with potential. Once you've managed to pinpoint some smart choices, however, the opportunity for profits may be worth chasing.

Though there's some guesswork involved in any trading situation, don't underestimate the complexities of affordable penny stocks. Tools like candlestick charts and line graphs can help you identify key patterns in the stock's value. Learning to spot these important penny stock trends will help you stay ahead of the pack when you're trading. Make the most of these short-term investments by keeping a keen eye on the direction each stock is headed. With a sharp eye for the right trends, you may achieve great success in penny stocks.

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