To gain from the investments in Penny Stocks, which in itself is a very dicey investment option, you should be very careful about what to pick and what to avoid. Penny Stocks which boasts of converting small capital into big fortunes are primarily those publicly traded stocks that are presently trading under $5 per share. They attract both the traders as well as long term investors because of the small amount of capital required to make substantial gains.

Most of the Penny Stocks are traded on NASDAQ, Pink Sheets or on the Over the Counter Bulletin boards. However, the Penny Stock companies should not be considered inferior in any sense to those traded on major exchanges. In fact, many of them have better growth rates than some of the NYSE stocks and promise handsome returns on petty investments. Yet, you need to do your homework and gain knowledge about these companies to profit from them. Penny Stock picking sites and bulletin boards often assist traders in finding emerging companies but getting influenced merely by the impression created by these sites and getting entangled into the hype generated by the phone salesmen or professional promoters hired by some companies for this job specifically, can lead to disastrous consequences.

As a wise trader you should always avoid those penny stock picking sites which use false advertising and misleading statements which project unrealistic gains, such as,