Saturday, September 18, 2010

Canadian Penny Stocks - The Basics Guide

Young, small, and new Canadian companies focused on the field of commodities and technologies may now take advantage of the opportunities offered to them by canadian penny stocks and this is their great chance to show their skills and abilities to build a good shareholder value. Canadian penny stocks are available through the Toronto Stock Exchange and the TSX Venture Exchange for only $5 or lower. Indeed, it's a great opportunity not only for companies but for traders as well since Canada is known for its rich natural resources and great manpower as produced by really good Canadian universities.

In order to trade in and buy Canadian penny stocks, you first have to find a stockbroker that can purchase Canadian stocks. All the stocks in Canadian trades are traded (bought and sold) in Canadian dollars. Like any other hot penny stocks, you want to buy stocks of a company that is headed towards a good direction through the development of competitive products and constant increase in their sales.

If you are a non-Canadian investor, perhaps a US investor, you have basically 3 choices of trading in Canadian penny stocks. First, you can choose to purchase pink sheets. Second, you can choose to open up an account with a Canadian stockbroker. Third, you can choose to open up an account with a US stockbroker with an entry to the Canadian securities and exchange.

Buying pink sheets can be a good option; however, you need to do this with extreme care because it is an unregulated secondary market. It is a wise move to first gain necessary knowledge about it from experienced traders in Canadian penny stocks or from magazines and newsletters that feature Canadian penny stocks. The other options on the hand require you to be aware that listed companies are often first listed on the TSX Venture Exchange until they complete all the Toronto Stock Exchange requirements. The good thing about the second option is that stockbrokers can offer you additional research services. The 1st and 3rd options allow you to have a great deal of savings from currency conversion or exchange rate needed to trade in the Canadian penny stocks.

Below are the steps to buying buy penny stocks

Step 1:

If you have plans of purchasing Canadian penny stocks, inform your investor about this plan because he will be the one to contact a stockbroker. The stockbroker will then facilitate the purchase of Canadian penny stocks either through TSX Venture Exchange or Toronto Stock Exchange.

Step 2:

Make sure to research on companies that are headed towards the positive direction so as to make sure that your investment will gain profit instead of loss.

Step 3:

Decide on your investment budget. Keep in mind that investments in stocks trading are more profitable than the conventional stocks trading.

Step 4:

Make it a habit to visit the website of Toronto Stock Exchange or TSX Venture Exchange daily so that you can monitor how your canadian penny stocks are performing in the Canadian economy. This way, you can decide whether to wait or let the stocks go by selling them.

Canadian penny stocks are such a lucrative investment. However, there are some points to remember to make sure you will get profit from them. I hope I was able to facilitate some important aspects of canadian penny stock trading.

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