There a lot of methods of investing your money. People are attracted to the stock market for the possibilities of making a lot of money quickly.While you can invest in a big company and watch your wallet grow over time, you can be a little riskier and invest in penny stocks for a much quicker gain.

There is a whole other monster that people don’t talk about much. Pink sheet penny stocks are stocks that are much less regulated and much more volatile.They are not technically apart of the major stock exchange and act much differently than your average stock does.

- What Are Pink Sheet Penny Stocks?

These stocks are very small. They can be defined as under $5.00 but most people think of under $1.00 when they thing of penny stocks. Some of them can be as low as $.05.

They are much less regulated and have a lower requirement for supplying information. These stocks are not part of the major stock exchange. They do not have the same requirements as others. It is very important that you monitor these stocks and do your research well.

There are risks and rewards to pink sheet penny stocks that you should be aware of before you think about putting money in them.

- Risks

These companies are so less regulated that information that is required of major stock exchange companies may not be available. A company may simply disappear into bankruptcy without much notice. That is why, especially in these types of investment, it is always important to diversify your money.

Diversifying your money puts you at a much smaller risk of losing a lot of your portfolio. I would not commit more than 10% – 15% of your portfolio in a single stock this size.

- Rewards

While you need to be careful and make well thought out decisions, there is a ton of money to be made in pink sheets. That $.05 share can quite easily and quickly become $.25. That would be an incredible 400% ROI in a very short amount of time!

If you compare this to long term investment plans in bigger companies, you can see how much money there really is in this. Becoming a good investor in these low price stocks is something that day traders dream of.

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- How to Start?

Take a small portion of your portfolio, lets say about 10%. Use that and only that and invest in a stock like this. Do your research and take your time. This will limit your risk and you never know, that 10% might be your biggest hitter!

Penny shares can be very attractive. With such a low price, even a small rise in the price can mean a huge return on your investment. This means the opposite as well, so you have to be very careful when finding penny shares to buy.

I am going to outline some things to look for when you are seeking a good penny stock investment. Following these guidelines should make it easier to cut out the losers and find some great opportunities!

1. Looking at The Overall Value of The Company

Here is where we find one of the biggest problems with penny shares. A company with a low overall value, lets say 50 million dollars, is easily manipulated. With such a low value, the overall value of the company can change very fast.

Even just a group of big time investors can buy and make the price spike, or the can sell and make it drop. If you get caught up in these games, some people call them scams, you could end up losing a lot money very fast.

You should stick to companies whose overall value is much higher. These are safer penny shares to buy.

2. In Small Stocks, Short Term is The Key

Big companies are good for long-term investments. Many people put their money into big name companies and hold on to it for many years. While this is a less risky method of investment, it takes a long amount of time to see a big return.

Short-term investing is where people make the big dollars fast, but only the smart investors do. The most important factor in choosing a great stock is to research a company in and out.

-Do they have a profitable history?

-Why where they profitable then?

-How much of the company is traded daily?

-Who runs this company and how qualified are they?

Knowing these things makes is much easier to get a accurate feel for a company. Investors that put the time in to research are much more likely to get a positive return on investment.

3. Make a System That Works

Just like anything in life, making money in stocks takes practice. Without a good strategy, you are going to be sunk. Luckily, there are lots of tools out there that make doing the research and making choices easier. You can find a list of our favorite tools here: Investing Tools

Find something that works for you and stick to it. Have faith in yourself and don’t give up if something goes wrong. There is no reason in the world why you cannot succeed.

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There are a lot of option when it comes to investing. With so many companies out there, its sometimes hard to know where to focus your attention.

There are however, many guidelines you can use to know the hot penny stocks that deserve your attention. I’m going to cover the most basic and important of these.

1. Research Gives You Much More Than You Know!

Since information about a company is very public, it is actually very easy to pick out the ones with potential. Knowing the in’s and out’s of a company is what makes the successful investors successful.

Most people only look at profit history and current news on companies. While these are very important, they are only part of our research.

Look into the people behind the profits. Ask yourself the following questions.

- Who runs this company?

- What is there is history in outher businesses?

- Where they successful there? If so, Why?

Knowing more about the people behind the scenes will let you know how devoted someone really is to there company. You would be surprised to see how many people with a terrible history of mistakes run companies!

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2. Finding Dynamic but Reliable Stocks

You want stock prices to change. If they did not, you could never make any money! You need to find a small collection of stocks that change in price decently fast, but also have a reliable trend they tend to follow.

Trends are not the hidden secret to investing. Even the most consistent stocks vary from time to time, but they are amazing for finding good opportunities.

If a company does most of its sales in the summer time, you can bet their price will fall in the winter. This does not mean for a fact that it will rise again when summer rolls back around, but there is most likely a good chance it will.

Don’t go by things like this alone, but use them in your research as a way to narrow down which opportunities you are considering.

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3. When Your Done with Research, Research Some More!

I’m not saying you should never stop, but the more you know, the better chance you have at having a profit. Use this data as a way to focus on the good situations and less of them will pass you up!