Exploring Penny Stocks 1

Exploring Penny Stocks

What are Penny Stocks?

Low-priced, small-cap shares are commonly known as penny stocks (We’ll also discuss them as nano, micro, or small-cap stocks). In the evaluation of their name, penny shares scarcely value a penny. The SEC views them to be anything over $5. Even though sub $five shares are bought and sold on large exchanges like NYSE, NASDAQ, and the AMEX, most investors and traders don’t forget those when requested to explain the pennies.

Many person traders and buyers glimpse at micro stocks like Wall Street’s mafia, an untamed world of making an investment break free of all of the glamour and media coverage with stocks traded on predominant exchanges. While the profits and losses may be pretty marvelous or damaging in the micro inventory world, they’re no longer regularly heard about elsewhere except for buying and selling more volatile alternatives, in my humble opinion.

Penny Stocks

Just because you in no way pay attention to penny shares every day on CNBC or The Wall Street Journal, it doesn’t mean they are not without drama. Many nano shares pay third-party associates to tout horrible businesses, promote their stocks to an unknown investor, and sell into them(additionally referred to as a pump and dump). Unfortunately, small-cap shares have garnered a reputation as a game packed with scams and corruption due to those ongoing pumps and dumps. Indeed, those micro shares can be your wildest trip, yet most effective as an investor in a stable company or a dealer aware of his technical analysis.

How to Buy the One’s Pennies

Like some other inventory you’ll purchase, you could purchase stocks of a micro inventory via your normal stockbroker—regardless of whether or not it is indexed on a first-rate exchange. Recommended agents for small-cap shares (Speedtrader, LiteSpeed, Scottrade, Etrade, Capstone, Interactive Brokers, Suretrader) either way; they all have remarkable execution and reasonably priced commissions.

Even though reasonably-priced stocks listed on exchanges such as the NYSE and the NASDAQ dodon’t commonly appear as “penny shares” in line with se, they can provide quite a few of the benefits of small-cap shares without many risks. These exchanges have traumatic listing requirements, and at the same time, as they will not allow for as much an upside as “actual” penny stocks can, they may be, in all likelihood, extra dependable. Micro stocks often exchange on list services like OTCBB and Pink Sheets.

Over-the-Counter Bulletin Board, or OTCBB, is a quotation. Unlike Pink Sheets, which is just a quotation writer, OTCBB retains listing requirements (although they’re much less stringent than an alternate). For this motive, OTCBB has brought legitimacy.

Pink Sheet is a system that offers traders citation data on shares that are registered with it. Unlike OTCBB, Pink Sheets aren’t registered with the SEC and would not enforce any listing requirements. Bottom Line: Pink Sheets stocks are unstable as there is a lot of manipulation and scams from insiders and market makers. These also consist of sub-penny stocks (something below .01c).

The Potential Payoff

With all the hazards involved, why might any dealer or investor need to position their money in a nano stock? The answer is volatility and first-rate fast results.


I am a writer, financial consultant, husband, father, and avid surfer. I am also a long-time entrepreneur, investor, and trader. For almost two decades, I have worked in the financial sector, and now I focus on making money through investing in stock trading.