Make Your Money Work Well in Lesser-Known Market Corners
While penny stocks often lure inexperienced investors with low entry prices and a high potential for dramatic returns, they also come with increased risk due to low liquidity and limited financial reporting. I hope to introduce you to methods for effectively balancing the risks and rewards associated with undervalued and high-potential penny stocks. Many people finding this guide will be looking for stock picks. If
Interpreting the OTC Market is a crucial component of discerning how to buy penny stocks. A majority of penny stocks aren’t listed on a stock market like NASDAQ or the NYSE but instead on the OTC market (or OTC securities market).
NASDAQ (National Association of Securities Dealers Automated Quotation) controls a little component of the over-the-counter market with the NASDAQ National Market (NNM), but this portion of the OTC Market doesn’t include penny stocks.
Pink OTC Markets, at one time called the National Quotation Bureau (NQB) and colloquially referred to as “Pink Sheets”, operates on the most active component of the OTC market. If you begin earnest and extended penny stock trading, you’ll at some point deal in Pink Sheets.
These days most people rely on search engines and the internet to do research. While this is a decent place to get some information, it doesn’t always provide the most complete or the most accurate information for everything — it really depends on your source and the subject matter. If you’re searching for accurate and detailed information about penny stock companies so you can make wise investments, it’s better to broaden your search beyond the internet, where there are too many sources of fraud and scams anyway. There are a few specific places you might want to reference before you put your money on the line.
One good place to check is with the SEC. If the company files with the SEC they are making an attempt to look legitimate. Along the same lines you may also want to check with your state regulator as well as the state regulator for the state in which the company is located. This is often the first place complaints about a company or stock are registered; some complaints never leave this state level, so you may find out more by going directly to the state office.
If you are just getting started in the business of penny stock trading you’ll need to know where to buy penny stocks. But before you even ask this question it is important to understand more about this specific market and these stocks to see if this is something you really want to consider.
There is a simple and a not so simple answer to the question of where to buy penny stocks. There are a number of brokers who can help you buy and sell penny stocks, but to get the most out of your time and money you want to choose the right brokerage company. Each of the online stock brokers offers different services, has a different minimum balance and charges different fees for each trade. You may initially want to go with the cheapest broker but this isn’t always the best way to go, at least in the beginning.
Besides choosing a broker you need to know where to go to find and research these stocks so you can monitor them and determine which ones to buy.