Knowing how to buy penny stocks online and not get scammed is crucial so you won’t be taken advantage of by unscrupulous people or groups trying to maliciously make money out of honest investors.  Many people who want to get a higher yield often invest in penny stocks which are typically stocks priced under $5 that trade of the OTCBB or Pink Sheets exchanges. These stocks can be bought at a low price, and can move up very quickly. However, just like in the bigger stock markets like the NYSE, NASDAQ, TSE etc.. the road to success when investing in small cap stocks is a tricky. Here are a few tips on purchasing penny stocks online and not get scammed.

Conduct Your Own Investigation

Conducting an investigation on the penny stocks you want to invest in plays an important role in avoiding penny stock fraud. Even the self-proclaimed financial analysts or stock market gurus are not worthy of every inch of your trust. It’s good to seek advice from the experienced, but the person you have to trust the most with your money is yourself.

Check Company’s History

Always look into the history of the company you intend to buy the stock in. It has been proven time and again that a company without a solid foundation is not worth investing into. Look for things like company assets, a solid management team etc… Also, investigate how the company is perceived by other investors.

Don’t Believe in All the Hype

Pump and dump penny stocks scams are common in the market. This penny stock market scam involves fraudulent investors who buy large amounts of “worthless” stocks and hype it up inflating the price. As new investors enter the market, the scammers then dump their shares of the stocks at a much higher price, and then leave you with an inflated worthless stock that usually crashed back down very quickly. Even some of the lists of the supposed top 10 penny stocks to invest in can be part or all the hype.

Be Careful With Popular Stocks

Be extra watchful when buying popular stocks like oil and gold penny stocks. Although real oil and gold stocks may provide you with good profit, it’s harder to find the really legitimate ones. This is because many fraudulent individuals or groups use popular companies in trying to make a huge amount of money from investors.

Watch Out for Spam Emails

Unsolicited and spam emails are also commonly used in penny stock scams. Avoid replying to these emails. If you find yourself convinced by the emails’ persuasive contents, investigate where the stock information came from.  Even if you receive emails from some “penny stock advisor” telling you to buy certain stocks, it would be best to check who the source is that’s sending you this buy recommendation as well as do some research on the stock yourself.

Not all Penny Stock Newsletters Are Run by Scammers

Now at this point it’s important to note that not all penny stock newsletters are run by scammers. There are stock picks alert and recommendation type services and small and micro cap stock pick newsletters out there that only work with and recommend legitimate companies that have a solid business and are simply looking for more investors so they can scale and expand operations.

Where To Get Legit Penny Stock Recommendations?

I’m currently recommending a number of companies that trade on the OTCBB… if you want to hear about my recommendations then sign up for my newsletter called “Paul’s Penny Stock Insider” by clicking here.