What are penny shares and how much do they earn?

True to their name, penny shares are inexpensive stocks that can be purchased for as little as two pence on up to a few pounds at most. Although these stocks have a much lower value than the major stocks that make the news, they still can see tremendous gains over the time that you hold onto them. Even a small jump of a few pence in share value potentially translates into an overall holdings value increase by many times that, a situation that results in a huge profit.

Of course, since stocks often fluctuate greatly, you should never count on share prices to always go up as they can quickly take a disastrous nose dive. Therefore, all successful trading is dependent on solid research and knowing which penny stocks to watch.

Below is a listing of the wide variety of penny shares:

• Shares that have been newly issued
• Stocks that are recovering their value
• Stocks whose values are cyclical in nature
• Stocks that are normally stable (also know as defensive shares)
• Web-based or online companies
• Companies that specialize in biotechnology

A good, safe way for beginners to learn more of how to invest in penny shares is to build an imaginary stock portfolio. By taking this trial run approach at the stock market, novices can discover and learn to avoid common mistakes before actually investing real funds.

Naturally, you don’t really own any of the stocks in your imaginary portfolio, but you can learn just as much through monitoring and tracking your fake shares as you would have if you had actually invested. This technique removes the risk to your funds while giving you the opportunity to learn “on the job” in a virtual scenario.

Additionally, an imaginary stock portfolio enables you to try out the various stock tip sources available. Try following their advice in your portfolio for six months and then see what you would have gained if you had really invested. For more detailed research, try creating two or more imaginary portfolios using different tip lists to discover which one gives you the best results. The beauty of this system is that you can soon see which of the various tip providers really know their stuff.

I currently receive a couple of lists via email that promise to draw me a treasure map to the penny stock pot of gold. It should come as no surprise that what I’m actually getting is far from earth-shattering.

However, there is one list from GS that I can heartily recommend as a way for you to begin your investing journey. Their emails are full of helpful information, much of which is applicable to the penny market. If you wish to get their emails click here. In contrast to many of the lists out there, the one from GS is free (actually free as in they don’t ask you for a credit card number). Also, the emails contain some fascinating insights whether you decide to follow their advice or not.

I read this blog daily, and it was in one of its posts that I first learned about the GS list.

While it is my intention to keep this blog continually updated, my motivation to write here might not match my motivation for investing in penny stocks so I will take this opportunity to wish you success in your future endeavours, let me know how you do in the comments below!