Trading of penny stocks

Introduction to penny stocks: The trading of the regular stocks is generally takes place at the various stock exchanges, however penny stocks trading generally takes place outside of the national stock exchanges such as NYSE and NASDAQ. In general penny stocks are traded in over the counter market or OTCBB and pink sheets and some of the shares are available for pennies. A few penny stocks has a huge potential to reach the better levels and even competes the regular stocks, however there is a need to correctly identify these stocks. Smaller companies whose market capitalization is below 5 million offer the penny stocks and as soon as the company grows, there is a sharp increase in the penny stock prices.

Share markets:
The major stock exchanges include the NYSE, NASDAQ, OTCBB and pink sheets. Penny stocks are generally traded at OTCBB and pink sheets, however as per the guidelines of SEC penny stocks can be traded in all the exchanges.

There are various minimum requirements for listing of shares by the companies at NYSE and NASDAQ. There is only one requirement for trading of penny stocks at OTCBB and that is the company should remain current in SEC filing. There is no place for a penny stock quotation if the stock does not meet the minimum standards set by different stock exchanges or OTCBB. Sometimes the penny stocks already being quoted at OTCBB, do not meet the SEC requirement will be allowed a certain period for completing the formalities and if the companies do not fulfill the required condition even after a 30 or 60 period of grace time, the penny stocks will be removed from their listing.

Pink sheets play a major role in over the counter trading. National Quotation Bureau or NQB provides this service. In actual the NQB prints the details of share prices and other information on pink sheets, as it is difficult to obtain the prices of these shares otherwise. Most of the time brokers get the price and other information on penny stocks from market makers and provide it to the customers. In today’s Internet era, you can find the details of penny stocks just a click away at the website of pink sheet. A company has to meet the minimum requirement of pink sheet for listing and quoting of the share at pink sheets.

Companies prefer to list the shares at NYSE, as it is highly preferred stock exchange. The next preference is given to NASDAQ and then comes the NASDAQSC. NASDAQ in recent past has become more popular and companies who have listed their shares at NYSE are also interested to list the shares in NASDAQ. The last preferences are OTCBB and Pink Sheets.

Summary: Various stock exchanges have laid down the minimum requirement for listing of the shares at the stocks exchanges. Pink sheet has the minimum requirement for listing of shares. However in this age of Internet the share information can be gathered at the website of pink sheets.

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A Spiraling Market and Rising Penny Stock Opportunities

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It’s been a wild and wooly couple of weeks on the international stock markets [June, 2006]. But is the recent slide grinding to a halt…or just taking a breather before tumbling some more? And more importantly, what does it mean to astute penny stock investors?
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It’s been a wild and wooly couple of weeks on the international stock markets. But is the recent slide grinding to a halt…or just taking a breather before tumbling some more? And more importantly, what does it mean to astute penny stock investors?

Wall Street recently stumbled to its worst week of the year, and global stock markets fell dramatically on concerns about rising interest rates and slowing growth. After rising almost 9% in the first four months of the year, the Dow Jones industrial average has fallen about 6.5% from a six-year high, reached May 10, 2006.

Stocks have been ailing because penny stock investors fear the Fed could be so focused on inflation that it ignores signs of an economic slowdown, raises interest rates too high and sends the economy into a recession.

Global stock markets were sent reeling last week after golden-tongued U.S. Federal Reserve Chairman, Ben Bernanke shocked penny stock investors in saying the Fed will continue raising interest rates to keep inflation in check.

And that decision will have a direct impact on the penny stock market. Higher interest rates hurt penny stock prices because investors believe it will curb economic growth and corporate profits.

But why is inflation heating up? Higher energy costs. Traders and penny stock investors are also worried that with the hurricane season officially under way, Gulf Coast refineries and oil production sites could be damaged again this summer and fall.

And higher interest rates have the ability to affect the entire economy. Finance charges on credit cards will rise. So too will rates on mortgages and home equity loans, putting additional pressure on homebuyers and a softening housing market. Ultimately, it will cost more to borrow for expansion.

But does this signal doom-and-gloom for the penny stock market? Au contraire. While the temptation to sell everything can be overwhelming, some see this as a great opportunity. “I would not be selling. I would tend to be buying,” said one New York analyst.

So how exactly is this an opportunity? It just so happens that many companies caught in the market’s downward spiral are cheaper than they were a few weeks ago. And as any seasoned penny stock investor will tell you, buying a great penny stock when it’s been beaten down isn’t a bad way to make money over the long haul.

If you can stomach some of the volatility that is. While many blue chip investors have difficulty handling the market’s unpredictability…it’s par for the course.

So, “snap out of it,” said another watcher. A month of dizzying selling has brought the markets into an attractive range. Is it possible the markets will fall more? Absolutely. After all, no penny stock is a sure thing. But one thing is certain: “Stocks are much cheaper now than they were two months ago.”

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