If you’re looking to make some quick cash, why not consider investing in the stock market? Chances are, you can find a lucrative market to dive into – and the opportunities don’t necessarily have to be limited to the big stock exchanges, such as the NYSE and the NASDAQ. There are countless small cap stocks that are poised to deliver handsome profits to intrepid investors. Many of these stocks can be purchased for pennies on the dollar, meaning your investment may be valued at only a small fraction of its actual worth. That’s precisely what makes the stock market such an appealing investment opportunity.
Find A Market That’s Trending Plus Has A Solid Foundation
To generate profits from stock investing, you’ll need to find a market that’s both trending and has a solid foundation. The latter, in particular, is the most important consideration, inasmuch as you want to avoid purchasing a stock that’s bound to plummet in value after you make your investment. As for the former, a trend-setter is a well-recognized stock that acts as a flag to signal which direction the market is heading. When you purchase a stock that’s currently in the midst of a trend, you can be sure that the price will most likely continue rising, at least for the short term.
Know The Differences Between The Different Stock Market Types
If you’re new to the stock market and aren’t sure which kind of market to dive into, it’s best to begin with the most basic guidelines. For instance, if you want to invest in the NYSE, it’s best to do so through a reputable brokerage firm, such as those authorized by the Securities and Exchange Commission (SEC). The NYSE, along with the rest of the major stock exchanges, operates under the umbrella of the SEC. In almost all cases, you’ll need to do some research beforehand to find out the differences between the different types of stock markets. Here are some of the most common and critical distinctions:
Traditional vs Electronic Trading
For starters, traditional stock trading takes place predominately in person at a physical location, such as a stock exchange. On the other hand, electronic trading (also known as “dark pool” investing) takes place primarily over the internet and is usually done anonymously, though some exchanges offer “anonymous investing.” Due to the increasing popularity of online stock trading, it is quite possible that your stock exchange will offer you the opportunity to invest electronically. If this is the case, be sure to take the time to familiarize yourself with the tools available to facilitate online investing.
As an investor, you’ll have the option of either purchasing a traditional share of stock, which is issued by a company and represents a claim on the profits of that company, or you can purchase an “Unlisted Security,” which are shares in an unregistered company that are not readily accessible to the general public.
Investment Vs Speculative
As mentioned above, traditional stock trading is usually a considered an “investment” activity, in which you expect the value of your investment to rise in line with the performance of the company you’ve invested in. On the other hand, “speculative” trading is the act of making an investment with the aim of making a profit, without necessarily believing that the price of the stock will rise. For example, if you’re purchasing a stock that’s currently in the midst of a trend, you can be fairly certain that the price will continue rising for the foreseeable future, making it a lucrative investment opportunity. However, if you’re a speculator who happens to be correct, you may make a large profit from your investment, even if the stock price goes down after you buy it.
Whether you’re purchasing a traditional share of stock or an Unlisted Security, the overarching rule is to buy a low price versus a high price. That is, you want to buy a stock or mutual fund that’s currently trading at a discount versus one that’s extremely overpriced. Ultimately, what this means is that you need to find a way to accurately gauge the “fair market value” of a stock, which is a subjective and challenging task.
What’s A Penny Stock?
An “Exchange Traded Fund” (ETF) is a type of mutual fund that’s traded on a stock exchange – and thanks to the increasing popularity of online investing, many mainstream stocks are available as ETFs. An ETF is usually composed of a portfolio of stocks that are bought and sold together as a single unit. For instance, the iShares Russell 1000 Growth Index Fund (RW1000), which was created and distributed by the iShares company, is a type of mutual fund that’s similar to the popular Vanguard 500 Index Fund (V500), but it also contains substantial investments in smaller companies, as well as companies that are based in emerging markets, meaning that there’s a greater chance that the value of your investment will rise.
Penny stocks are exactly what the name implies – stocks that cost only a “penny” (or a few pennies) to purchase. Due to their low price, penny stocks are usually highly volatile, meaning that they can experience substantial price fluctuations, either up or down. While there are many legitimate reasons why you might want to consider investing in penny stocks, it’s important to remember that the key takeaway from investing in penny stocks is to buy low and sell high. This is easier said than done, since it’s extremely difficult to accurately divine the “fair market value” of a penny stock. Many times, a penny stock is grossly undervalued by the majority of stock analysts, financial institutions, and most importantly, the market itself. This being said, there are many legitimate reasons why you might want to dive into the world of penny stocks – such as the fact that they’re usually less regulated, accessible, and in many cases, more innovative than traditional large-cap stocks.
Consider All The Options Available To You
If you’re new to the stock market and don’t have a lot of money to invest, the best course of action is to start small and build up your portfolio gradually. Even better, you can access some of the best investment opportunities through reputable brokerage firms that also deal in penny stocks. Due to the lack of regulation in this area, it’s quite easy to find a reputable brokerage firm that deals in penny stocks. Just remember to be careful and make sure you read reviews before you dive in.