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Penny Stocks in the UK - The Best Way to Start

Author: Catherine Lysenko
22 April 2021, 15:41
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Votes: 1

As the latest news in finance suggests, today, penny stocks are underestimated. However, it is a great way to raise the first money in the investing industry. Want to see how to trade penny stocks in the UK online? Read the information below.

Penny Stocks in the UK - The Best Way to Start

Penny stocks are the cheapest small emerging shares with little value. Most often, they are used by scammers, which is why penny stocks are considered garbage stocks. Historically, it is believed that the value of such shares should not exceed two dollars. The minimum allowed value is one cent.

Novice investors invest their savings in similar cheap-cap stocks that can be sold or bought on the well-known NYSE and NASDAQ stock exchanges. However, it is a misconception to consider these stocks as penny stocks. Since in reality, they cost more than 1 cent.

Most often, their price ranges from one to five dollars per piece.

Why UK penny stocks aren't so popular

The Securities and Exchange Commission of the United States of America argues that a penny stock can be attributed to any stock, the value of which is insignificant, but it cannot be more than $5. Experienced investors and even the world's richest persons are wary of trading on the NYSE and NASDAQ precisely because of the large number of such stocks circulating there.

And due to the huge losses and fabulous profits that penny stocks can bring to their owner, this segment of stock trading is considered a world of wild and too risky investments. Hence the reputation of penny stocks - as a crazy adventure for an investor, not without scams and corruption.

Any penny stock is a high-risk investment. The main reasons for the emergence of risks are low liquidity and cost instability. According to analysts, penny stocks are constantly plagued by low liquidity. This is a very serious risk factor for investors, and therefore their sale, after even a small capitalization, can be very difficult.

How to trade penny shares in the UK online?

Not all investors are eager to invest in penny stocks. The reason for this is simply that stocks are too prone to change in price over short periods of time, and these indicators are not stable.

penny stocks uk

But this also has its advantages - in just a few hours or days shares can grow in value several hundred or even thousand times and make their owners rich. And such cases are far from uncommon. There are many stories of how investors using the best esports stocks have been able to increase their profits by 1000% in a short period of time. The most basic rule is to find those "gold-bearing" penny stocks.

Where to buy them?

UK penny stocks can be purchased on American OTCBB and OTC Markets Group electronic exchanges or through your agent broker. 

The most popular and most reliable for such transactions is the OTCBB platform, as it requires companies to provide data on accounting and financial statements before listing their shares for free sale. Also, companies, if necessary, are required to undergo audits.

List of the best penny stocks in the UK 

Brokers who trade penny stocks to lure investors promise that after the first public sale of these shares, clients will instantly receive fabulous profits.

Since these companies will automatically pass a rigorous selection process and their shares will take their place in the list of exchange-traded securities admitted to public trading on stock exchanges. And the company that has released them will acquire the status of honest and stable.

Still, for today there are a few decent companies to invest in. The most attractive ones are as follows.

Kanabo Group (LSE: KNB)

The medical cannabis market is growing year by year. Therefore, it would be wise to invest in manufacturers of the most popular legal products:

  • CBD oil;
  • CBD pills;
  • CBD wax;
  • etc.

Airtel Africa (LSE: AAF)

Entering the emerging markets is essential for any investor. Since a high probability of rising wealth levels in some parts of the world, it would be perfect to have some shares there.

best penny stocks uk

One of the best offers is to get some shares of Airtel Africa. This is a UK-based telecom operator providing telecommunications services in Africa. The founders of the company believe that the African market has the potential to grow. Thus, don't neglect the opportunity to become a part of this project.

Empiric Student Property (LSE: ESP)

And the last option is to invest in Empiric Student Property. As you may have guessed, this company has plans to conquer another developing niche - providing accommodation to students.

British universities are one of the most popular institutions, so these penny stocks are unlikely to be unprofitable.

Read more: How to invest in Twitch stocks

Read more: Best companies in the blockchain stocks market

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Frequently asked questions

How to trade penny stocks in the UK?

The only correct thing is to analyze the experience of successful investors. It is possible to trade illiquid stocks with the expectation of the effect of the merger of small companies. It is quite profitable to do it with companies in the IT field.

How to invest in penny stocks in the UK?

1) analyze the UK penny stocks market;

2) find the most appealing options;

3) hire a reliable broker;

4) develop a short-term investing strategy;

5) invest in the UK penny stocks.

What are penny shares?

Penny shares are stocks with a price of less than 5 USD per share. They are usually used for highly speculative trading. As a rule, such shares belong to small companies that have not managed to gain a reputation in the market yet.

How to buy penny shares?

Just like any other stock, you can buy a fraction of penny stocks through your broker, but most of the time, cheap stocks are traded on services such as the US OTC Bulletin Board (OTCBB) and the OTC Markets Group.

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