| but carrying high risk... and are therefore one of the | | | | under $5 but still remain on a major exchange OTC |
| most exciting types of stock market investments | | | | stocks are traded on the over the counter bulletin |
| available. Want to know all about penny stocks? Well, | | | | board or listed in the Pink Sheets because they |
| I can't explain literally everything in a short article like | | | | cannot meet the requirements of the major |
| this... but I can give you some of the key information | | | | exchanges. |
| you'll need if you're interested in buying and selling | | | | Since this article is all about penny stocks, you may |
| penny stocks... | | | | be wondering about the difference between |
| In technical terms, penny stocks are securities that | | | | "OTCBB" stocks and OTC stocks. OTCBB stands for |
| are available for the public to buy, but are not traded | | | | "over the counter bulletin board" and refers to penny |
| on any of the formal exchanges such as the New | | | | stock companies with a bad credit record. |
| York Stock Exchange, American Stock Exchange | | | | Unsurprisingly, OTCBB stocks are higher risk |
| (AMEX) or National Association of Securities Dealers | | | | investments than OTC stocks. |
| Automated Quotation System (NASDAQ). Instead, | | | | What more is there if you need to know all about |
| penny stocks are traded on a dealer network and, as | | | | penny stocks? Well, it's a good idea to understand |
| such, are known as over the counter or "OTC" | | | | WHY a company issues penny stock. Essentially, it |
| stocks. | | | | tends to be offered by new, promising companies |
| The primary reason why penny stocks are traded | | | | looking for investment capital... or struggling |
| over the counter is because the relevant penny | | | | companies that can't meet the requirements of a |
| stock companies are relatively small and don't meet | | | | major stock exchange listing. They may have even |
| the revenue and asset requirements of the major | | | | been dropped by a major exchange. It's your job to |
| exchanges. Penny stocks also are known as "unlisted" | | | | find out WHY a given penny stock is a penny stock, |
| stocks since they are not listed on an exchange but | | | | and whether it's likely to be a good investment. No |
| are transacted by dealers who buy and sell over the | | | | question, penny stocks can be extremely profitable - |
| phone and using a computer network. | | | | a stock that rises from 10 cents to 10 dollars gives |
| Penny stocks are usually priced at less than 5 dollars | | | | you 100 times the amount of your initial investment. |
| per share. However, they should not be confused | | | | On the other hand, make the wrong decision and you |
| with listed stocks that just happen to have had their | | | | may lose your entire investment! |
| price drop to less than 5 dollars per share. In case | | | | If you want to know all about penny stocks you're |
| you're not sure whether a given company is a penny | | | | well advised to educate yourself as thoroughly as |
| stock company or a listed company, look for the | | | | possible on the subject. Read as much as you can |
| company's stock code. If it has the code OTC or | | | | from well-respected penny stock commentators and |
| OTCBB after its name, it is an over the counter | | | | be sure to do your due diligence on any penny stock |
| stock. A large company's stock can take a dive | | | | you are considering buying. |