Penny shares are just what the name entails; shares which can always be procured for a few pence and in most cases no more than a few pounds. Most of these stocks tend to be less valuable than the ordinary shares many of us are used to hearing about like as Apple and companies of that value, however may grow in size during the time you are in ownership basically raising in worth by thousands contributing to an enormous profit. These benefits are possible shouldn't be expected in penny share trading because you are buying lesser value stocks and it is a tad uncertain to have got high expectations.

You will find there are many types of penny shares on the market all of them differing in a significant way:

• Young or new issue shares

• What is know as recovery shares, companies that are supposed to be on the mend

• Cyclical shares

• Defensive stocks

• Dot-com companies

• Bio-tech organisations

All of the above companies have a reason to sell stock cheaply ie they are starting out, in the recovery process after some kind of disaster, the economy could have damaged certain types of business; there are internet companies that may shift rapidly, and compact bio-tech organisations that restrain on large and mass investments.

You may be wondering why you should dabble in penny stocks and the cynic inside of you may well wonder if it's worth the time or money with the value of these shares been so low, but the answer has everything to do with the low value. Because of this low value, you are not risking such a high investment this can in turn reap significant returns from less than a pound, initially. Obviously there are always various risks when trading penny shares as . Another thing to bear in mind chance of a takeover which could cause the stock to rise considerably; if a potential take over is in the midst, remember if it falls through the price could rapidly drop, do you sell at the hint of a take over or sit it out until completion to maximize on the rewards?

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.