Good Penny Stocks - Defining The Best Penny Stocks

You’ve heard of penny stocks, but the mere name of them scares you, simply because of its speculative sound. Yet you know that many people claim to have made absurd profits in the penny stock market. But before you decide to get involved in penny stock trading, you need to become educated in all the penny stock terminology, so that your definition of the best penny stocks matches that of those who trade them for a living.

Some Definitions Of The Best Penny Stocks
There are those who define the best penny stocks in terms of their price per single share. The Securities and Exchanged Commission, or SEC, has established a minimum price for Stocks to trade on the larger exchanges; normally it is $4 or $5 per share. So the best penny stock definition, according to them, would be any stock which failed to meet the threshold $4 price to get it off the penny stock exchange.

Once a stock has been sent to the penny stock exchange, it will trade there until the company is able to re-qualify it for a larger exchange, and this may not happen even if it is trading above $4 or $5, because other conditions need to be met. So many traders look at where a stock is trading as the best penny stock determination.

On the other hand, there are those who look at a company’s market capitalization–the total value of all its shares–as the best penny stock definition. A company with five million shares, for instance, which are selling for $1, has a market capitalization of five million dollars. Many traders think a company with that small a market capitalization is a penny stock. But others have a larger limit.

Both a market capitalization standard and a piece per single share standard for determining the best penny stocks are not reliable, because they can change so frequently. Those companies may no longer qualify as penny stocks shortly after you decide to begin trading them.

Finding Your Definition Of The Best Penny Stocks
You need to come up with your own criteria for judging the best penny stocks and stick to it if you are to succeed at trading penny stocks. You have to remain consistent in your trading philosophy; and you cannot rely on the trading philosophies of anyone else, like the penny stock newsletters, because they are not designed to help you; they are designed to take your money.

If you have decided never to hold a stock which gets over the $2 level because the best penny stocks to trade are under $2, then you should sell all your stocks as soon as they hit $2 instead of hoping for another nickel or dime. Your best chance of being one of those who make money in penny stocks, finding a way to decide on the best penny stocks, and sticking wh it, is your best hope.

About the Author:
You can also find more info on Good Penny Stocks and Hot Penny Stocks (http://www.pick-pennystocks.com/Articles/Hot_Penny_Stocks.php). Pick-pennystocks.com is a comprehensive resource to get information about Penny Stocks.
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