Penny shares are just what the name entails; stocks and shares that can always be acquired for a couple pence and generally no more than a few pounds. Most of these stocks are usually less valuable than the normal shares most people tend to be used to hearing about like as Apple and companies of that value, yet might grow in size for the duration of the time you are in possession basically increasing in value by thousands leading to an enormous profit. These benefits are possible shouldn't be predicted in penny share dealing as you are buying lesser value stocks and it is a tad precarious to have got excessive expectations.

There are several types of low value shares to buy each differing in a significant way:

• New issues

• Recovery shares

• Cyclical shares

• Defensive shares

• Dot-com companies

• Bio-tech stocks

All of the above companies have a reason to sell stock cheaply for examples just starting up, in the recovery process after some kind of disaster, it may be that they are rising and falling due to the economy; there are internet companies that may shift rapidly, and dynamic bio-tech organisations that restrain on large and mass investments.

At the moment you might be asking yourself if you should consider a dabble in penny stocks and the cynic in you may wonder if it is worth the investment if they are so low in value, but the rational for your low value actually. Because of this low value, you're not risking such a high investment this can reap high rewards from less than a pound. There are still various risks when dealing penny shares as a few percentage point drop in the value could almost wipe out your . Something else to think about the fact that there is a chance of a takeover which could really drive the price of stock upwards; if a potential take over is in the midst, don't forget if it falls through the price could plummet, should you sell at the hint of a take over or wait until it has gone through?

When dealing with penny shares, you should start with getting your toes wet before you jump in as there are many fast mistakes you won't even know you have made. The penny shares are quite volatile and it is quite difficult to master the technique as it is difficult to create an effective technique. There are several guides that can assist in getting techniques together, but you should only begin trading when you are confident that you understand the market.