The Basics of Penny Stocks
Penny stocks have different definitions, but the most common is, as the name suggests, what is good, they are low value shares. After the
Securities and Exchange Commission, these shares worth less than $ 5. Blue chips today was once sold for pennies also. But it is really a difficult
thing to find the right stocks to predict.
Penny stocks are not traded on the major stock exchanges. There are special scholarships trading penny stocks such as Over-the-Counter Bulletin
Board and Pink Sheets. There are different rules for these grants. Unlike the usual fairs in large flocks Terms OTCBB and Pink Sheets are not as
strong as the NYSE and NASDAQ. Penny companies are not strictly bound to the correct registration with the SEC under the rules of the
exchange, in order to keep their list. This exchange is not enough to present financial information in them. This suggests that the penny
companies are not adequately regulated and companies compared NYSE and NASDAQ.
Micro caps, although undervalued stocks, but they are considered riskier than the traditional equity exchanges. One of the factors is risky to
their membership in the low fair. Lack of information in the financial markets makes it difficult to select the right stocks. Sometimes companies
get bankrupt and there is no such evidence of the fair. Another problem associated with micro-cap, their liquidity is causing them. Difficult to
resale These factors make it difficult to find the right option.
When asked about why you invest in penny stocks? The reason to invest in them because they are undervalued, you can buy a large amount. A
person with a small amount of capital to invest in them. The big advantage is that the treatment of micro-cap that many it is again. For example,
a price change from $ 0.01 to $ 0.015 which is actually a gain of 50%, which is difficult to achieve with conventional bearings.
If you invest in micro-cap are interested, because it keep big gains, but you have to be careful, too. There are lots of scams prevailing in the
market as well. For investments, please contact someone who has good knowledge of the market. A good way to understand is through a
subscription to a newsletter. Experienced people working in the industry for 10 years can be best advised.
What are the Listing Requirements of Pink OTC Markets
Companies that are Pink Sheet listed do not need to comply with any requirements in order to make it to the list. All they need to do is
fill in a Form 211, with the OTC Compliance Unit and this is automatically done for them by the broker. If the company is more open
with their financial books, the broker will have an easier time quoting a price for them. The reality behind Pink Sheet listed companies
is that, some are more open while others are not.
Another thing that you have to know about the pink OTC market is that companies don’t even file regular reports with the SEC
(Securities and Exchange Commission). For the average investor, this can make it difficult to get reliable information regarding pink
sheet-listed companies. Also, these companies are mostly very small and tightly held most of the time.
OTC BB vs. Pink Sheet Penny Stocks
You might have heard about OTCBB from your friend or a stock forum, and you may wonder about the difference between OTC BB
and Pink Sheets. For one thing, pink sheets are privately owned while OTCBB is operated by the NASDAQ. This being the case, you
can find more stringent requirements for OTCBB and they file regular reports with the SEC. It is therefore easier for investors to get
information related to OTCBB than for pink sheet.
What are the Advantages of the Pink OTC Markets
Now with all these points taken into consideration, you might wonder about the advantages of investing in the Pink OTC Markets.
There are a lot of advantages actually, here are a few:
1. It’s very cheap
The biggest advantage of buying pink sheet penny stocks is that you can easily buy them for less than $5 per share. This means that
even if you don’t have a lot of capital you can still invest.
2. You could be investing in a once-strong company
Some pink sheet listed companies are once strong companies but for some reason, were delisted. If you make an investment in any one
of these companies and they make a comeback, you can easily gain huge profits.
3. You are early to invest in a rising stock
If a small company continues to grow and you have invested in it early on, you can be profitable with it especially, if it ends up on one
of the major exchanges in the future.