Penny stocks are stocks which are listed on the OTCBB and the pink sheets and in theory they are stocks which have a stock price $5.00.

The normal stocks trade on the stock exchanges such as the NYSE and the NASDAQ. For trading the regular stocks you will have to have a bank account and then you will have to find yourself the online discount stock broker. There are a lot of companies who offer their brokerage services and these companies also allow trading you in the penny stocks.

Now the question of OTCBB or over-the-counter bulletin board (OTCBB) is that the companies that are listed here are also adhering to the SEC listing requirements. Believe me that is needed if you want to make sure that your investments are a little bit safe and you have the publicly available information for your use to search.

Selecting the online discount brokers is the easy part of the whole game. But before you select the online brokers you need to make sure that you have compared on the internet all the online stock brokers and also that you have the research ready as far as the capabilities of each brokerage house.

Pink Sheets

Pink sheets are a different beast altogether. Although even OTCBB does not require the listing standards but the fact is that companies still have to comply with the SEC guidelines. OTC has another variant called the National Quotation Bureau’s (NQB) which is commonly known as pink sheets. These pink sheets are called so because of the fact that the prices are listed on the pink sheets of paper. There are almost like nil kind of requirements to list here.

Beware of newsletters and Pump and Dump style penny stocks.

The internet though a boon has provided a way for the lot of people to manipulate the stock prices of these penny stocks as people as ever are hungry for more information and want to make quick money. That said a lot of message boards and stock analyst will issue recommendations via the newsletters and get the price of a particular penny stock up and then they will pick another penny stock to go up.

The best penny stock picks are which regular companies are and which are still in their initial stage though they are promising. These are the ones you should invest and that will help you make a ton of money in the longer term.

So the best bet is to buy penny stocks using your online discount broker and then trade in well managed hot start up companies.

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What are penny stocks?

The penny stocks as the name suggests are the stocks that have the price which is in pennies. Well let us not take pennies literally as these stocks at times may have the market price which is more than a dollar. The main thing to note here is that they are traded on the OTCBB (Over the Counter Bulletin Board) and Pink sheets.

These stocks are designated as those which have a price which is less than $5 and also these stocks generally do not have the necessary mandatory listing requirements as required by companies which have good stock prices.

Tips for picking up penny stocks

Risky markets

For people who are trading in the penny stocks segment make sure that you know the basic rules for the penny stock investing

These are risky investments and hence you need to tread very carefully and without proper research the challenge is always twofold. You may miss out a great opportunity as you may not have the best information and on the other hand this will hamper your research. The flip side is also true that you can make good money as there is no information and if you are able to dig out the information then you will have the stocks that can give you returns which will be simply stupendous.

So invest in penny stocks which have substantial volume and are a bit liquid. Make sure that you have penny stocks that have some information provided about them.

As far as possible stick to stocks which have price between .05 and 2 dollars. Yes that may seem high but using this criterion you may avoid the risky bets.

Track your stocks everyday

Each day is a new beginning and you may be able to help yourself out of tricking situations by active monitoring of your penny stocks. This penny stock market is volatile and it does not help that you are not aware of the daily happenings in the OTCBB. Any news can impact your portfolio badly.

Let us see the top penny stocks which were there on Sept 16. These were IPWG, EXPH, NUBL.

Then the great penny stocks that were there on Sept 15 were PMAH, RKLC, HTDS. Each day throws up very different stocks and each of. So, daily trading and monitoring is a must to make money in the stock market.

Promise of returns and risk along with

The penny stocks can provide good returns but the challenge of having no information is always there. The penny stocks in the biotechnology sector are among the most happening and how do you track those? Well check the news about new drug discoveries and FDA filings to know which company is active. This is the trick. The information will not be given to you on a platter. You need to find good sources for that. There are several online penny stock forums and penny stock newsletters that can give you hot and buzzing stocks.

I am not sure if you can trust them or not.

Experiment with some small amounts on the recommendations given out by these pump and dump newsletters and see what happens. Chances are that you may be able to refine your strategy of making money through these. The majority of the times it is the few individuals who send out the letters who will be able to make money. So tread that path with caution.

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