Best Penny Stocks Under 10 Cents

The best part of investing in penny stocks consists of the fixed amount of risk you need to take upfront to purchase the stock and the risk-reward ratio of the investment. Buying cents per share might seem risky since many stocks trading at that level are on their way to oblivion. Returns can grow quickly if the stock ultimately begins to climb. It's important to know the best stocks under 10 cents to up your investing game.

If you catch onto a penny stock during someone else’s “pump and dump” scheme, you can make money if you buy quickly and sell before the price drops. This is why watchlists are such a good idea because a buy rating is often something you need to take action on as soon as you can. Market insights can tell you quite a lot about Wall Street and how the market moves. Plus, the stock price needs to tell you exactly what you’re getting, if you can afford that price or if you prefer to wait.

At the same time, a buy rating is not permission to buy any stock thatr analysts “think” is doing well. You must bring that stock to an investment advisor, review your brokerage account and square that asset with your investment management plan. As a stockholder, you can look deeply into stock quotes, market capitalization and stock market news.

Value stocks can also help you increase the net worth of your portfolio if you have very little money to spend. The first step in a long journey is a single step, and penny stocks might be your first step. Plus, this is often the most affordable way to begin to build a portfolio.

Also, by acquiring a block of stock at such a low price, you always know just where you stand with the risk involved since the lowest the stock can go is $0 and that isn’t far away.  The top 10 cheap stocks on the market, then, are a good entry point for the market and can result in increased profits. Choosing a couple of penny stocks to buy now can increase diversity in your portfolio while also reducing risk. Think of these stocks as a way of testing the market using market predictions, quick price changes, saving with value stocks and stock market monitoring.

Quick Look at the Best Penny Stocks Under 10 Cents:

• Medical Marijuana Inc
• Caduceus Software Systems
• Virtual Medical International, Inc.
• Fiore Cannabis Ltd

Overview: Stocks Under 10 Cents

Once you’ve decided to put some money at risk, research the stock market for companies with recent news and interesting products or services. Keep in mind that these stocks have an extremely speculative nature, so as a rule of thumb, don’t put any money at risk you can’t afford to lose. 

Because of listing requirements, most penny stocks do not trade on the NASDAQ or other major exchanges, unless the company’s exchange-traded stock has recently failed to meet listing requirements. Trading in these assets is mostly done through the OTC Markets Group. Quotes for penny stocks have traditionally been listed in the “pink sheets,” a quotation publisher that originally published the quotes on pink-colored paper. 

Keep in mind that due to the nature of these stocks, spreads can be wide with a minimum trading block of 10,000 or 100,000 shares in many cases, depending on the stock and the broker. Despite all the risks, the rewards can be considerable, with 1-day returns in the hundreds of percent in some cases. At the same time, those returns are on very low prices. Therefore, you must decide how long you want to rely on these assets before moving on, judging their growth potential every day so that you can protect yourself.

Best Online Brokers for Stocks Under 10 Cents

Many online brokers accept orders for stocks under 10 cents. However, be aware that most brokers charge commission for OTC Market stock trades—whether they are among the top 10 value stocks or not. Interactive Brokers offers Pink Open Market and OTC Market trading for selected stocks in its standard stock trading account and charges a fixed and a tiered rate.

Other online brokers with cheap stocks to buy now include TD Ameritrade, Charles Schwab Corp., ChoiceTrade, TradeStation and Zacks Trade. Commissions vary for each broker, from no-commission to $0.01 per share. Some brokers tack on a surcharge while others have a share quantity minimum depending on the stock. Call your broker for more details on trading “in the pink sheets”.  

Features to Look for in Stocks Under 10 Cents

• Product and potential future earnings: Due to the minimum listing standards, many penny stocks might be hard to research. Research your potential purchases as much as possible so you know you’re investing in a real company with a viable product or service. You’ll also make sure there’s potential for decent future earnings per share. Keep in mind that the penny stock market is rife with scams, so learn to avoid them. 
• Assets and liabilities: Study the company’s financials for assets and other tangibles that might make the stock an asset play, which means that stockholders might benefit from a liquidation of the company’s assets. If the company is laden with liabilities, stockholders may not be entitled to the proceeds of the sale of company assets. 
• Liquidity: Because of their low price and speculative nature, penny stocks could be hard to sell once you’ve acquired a relatively large position. Liquidating a large position in an illiquid market could wind up costing you most of your profits. Dealing in the top 10 penny stocks with an active and deep market seems best if you plan on taking large positions. 

Should You Invest in the Top 10 Penny Stocks Under $10?

The answer to this question depends on your goals as an investor or speculator and your pain threshold when it comes to risk tolerance. The first and foremost consideration before jumping into the penny stock market is if you can afford to lose your entire investment. Some people might say this could be your “let’s see what happens” money, as opposed to long-term investments you keep somewhere else.

If you answered “no,” you’d probably be better off buying the stock of more established companies such as stocks under $20, stocks under $10 and stocks under $5 that meet your needs. With that said, profits from choosing penny stocks to buy now can significantly surpass gains in other investments if you pick the right securities. This is why you want to look at them as half growth stocks and half penny stocks on the edge.

Above all else, research mitigates risk. While you should not invest in anything that you feel uncomfortable with, research increases your comfort level. Over time, you will feel much more comfortable with investments that you might not have understood when you started — that could include penny stocks. At the same time, you want to diversify every investment and sector in your portfolio to ensure that you are protected in as many ways as possible.

Frequently Asked Questions

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