What Does the term Penny Stock Mean?
The term itself is a misnomer because there is no accepted definition of a penny stock. Some consider it to be any stock that trades for pennies or those that trade for under $5 per share, while others consider any stock trading off of the major market exchanges (i.e., NYSE, AMEX, NASDAQ, etc.) as a penny stock. However, confusion can occur as there are some large companies, based on market capitalization, that trade below $5 per share, while there are many very small companies that trade for $5 or more.
The way I (PennyStockLawyer) use the term “penny stock” refers to stocks that trade on the Over-the-Counter Bulletin Board (OTCBB) or Pink Sheets, regardless of the per share value.
What Does Over-The-Counter Bulletin Board – OTCBB Mean?
A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange are required to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the Nasdaq and New York Stock Exchange, for a company to start trading on the OTCBB.
It is important to note that companies listed on the OTCBB are not a part of the Nasdaq Exchange. The truth is, OTCBB stocks are not especially large or stable and are considered very risky. As a result, very few OTCBB stocks are successful in making the jump from this market to the Nasdaq or any other major exchange because they are unable to meet the listing requirements. Furthermore, because OTCBB stocks tend to trade infrequently, the bid-ask spread is larger.
What Does Pink Sheets Mean?
A daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refer to OTC trading.
The pink sheets got their name because, before the age of computer trading, brokers would write their buy/sell orders for these stocks on pink colored paper for manual execution. Often you will see the terms “penny stock” and “pink sheet stock” used interchangeably by those who specialize in trading these stocks – hence the color scheme of this website. You can tell whether a company trades on the pink sheets because the stock symbol will end in “.PK”.penny stocks
Four easy ways to act on Penny stocks
Four easy ways to act on stocks
Prospective stock traders must have access to multiple sources. Just like learning a ??bike riding and swimming in a river is dealing in stocks making mistakes and improvising and you accept errors. Read on to learn about the four best ways to trade in shares to learn.
Research online and find good stocks as first, you broker must open an account at a trusted and reliable stockbroker. Start playing with the layout and the interface that is provided by the broker. A large number of practical tools are provided to only registered customers. If possible, you must choose a broker who can provide you with a free simulator account. With these accounts, you can learn to trade shares without risk of money is money too many requirements. It is recommended to free up sufficient time to practice on this simulator accounts before you begin with an investment of your hard earned money. Plus500 gives you a free practice account and 25 euro real money. This is a perfect practice step and a very easy interface for you to make competent to act without risk to walk on losses
Read good books about the trade in shares and follow video lessons on the internet. However, none of these funds may correspond with the wealth of information contained in books. You can use two or three good books about the trade in shares in the beginning. Only when you have finished reading these books, you can start thinking about buying more. If you proceed with books on investment, fundamental analysis, technical analysis and other relevant topics to read, you will also be in a better position to expert articles published on the internet to understand. So read again read and Reading
Read online you must get a habit to read articles online on a regular basis to develop. Instead of relying on one or two weekly financial magazines. Many online blogs and exhibition magazines provide complex information in an easy way. You can even articles that complex concepts for the purpose of illustration found on a simple way. It is one of the best ways to gain knowledge about specific subjects. For example, if you want to learn about the day trade and its pros and cons, you can find all the information on the internet with ease. Online articles have no full data such as books, but they serve as a simple and rapid source of information that you need.
Find an expert who can accompany you wherever possible; you can try to find a mentor. A mentor or teacher can be a friend, relative, office colleagues or somebody else. Someone the fundamental of action know about and which direct experience with the trade in the market. Almost all successful investors have received a form of guidance during their early days.p
Penny Stock and Micro Shares
Penny stock is the street name for microcap shares, stocks traded at a value of less than $ 5.00 per share. New companies or companies with liquidity, debt, or profitability challenges offer penny stock shares. These shares are not traded on the main exchanges but rather traded as over the counter. Due to the high volume of stocks being sold and the statutory standards, these shares are subject to other rules; the penny stock market is volatile and riskier than the more traditional blue chip market.
Investors who are interested in a high risk / high reward scenario can find a good investor on the penny stock market. These investors generally have a good grip on market trends and are familiar with the ins and outs of high trading volumes. Since penny stock shares are not included as part of the major stock exchanges, penny stock investors are advised to look elsewhere for available stocks and the research they need to make good decisions.
Penny stock shares are inherently speculative. It is often impossible to calculate the true value of most penny stock shares. You are mainly investing in the potential future growth of the company. Conventional funding logic can not provide an accurate measure of a penny stock. Investing in penny stock stocks is very speculative. In fact, many penny stock providers (companies) see their shares rising from investor speculation. Penny stock stocks are highly volatile and sensitive to drastic price fluctuations. Smart investors know how the swings work for them.
It is difficult to find credible information about penny stock stocks. They are not bound by the same standards of conventional reporting and archiving shares. There are many websites that can help you find the information you want.
Investing in Penny stock is not for everyone, penny stock investors have a high tolerance for risk and ability to manage stocks and have inherent volatility. If you have researched all the options, you can calmly and confidently make the decision about the penny stock market.
Remember, diversification is so important if not the most important with Penny stock than with traditional stocks.