| If you are new to the world of micro cap shares, we | | | | to the buying and selling of penny stocks. |
| can expect that you will want a penny stock guide. | | | | But first, where do penny shares trade? Contrary to |
| As its name implies, it is a guide to the whats, | | | | popular ideas, there are many venues for penny |
| wheres, whens, whys and hows of penny stock | | | | share trades and all of them are legal, of which the |
| investing and trading that both the novice and the | | | | following are the most well-known: |
| veteran investor and trader can take good | | | | * NASDAQ SmallCap Market is the safest place to |
| advantage of. | | | | find penny shares because of the strict reporting |
| Keep in mind that said guide is only that - a guide. | | | | requirements and compliance policies. |
| Ultimately, you have to make the decision whether | | | | * OTC-BB is also a highly-regulated quotation service |
| to buy or sell or keep the penny shares at any time. | | | | displaying real-time quotes, volume information and |
| Yes, your stockbroker may be of help but we still | | | | last-sale price. |
| suggest being on top of your investments since it is | | | | * American Stock Exchange (AMEX) offers excellent |
| your money at stake, not anybody else's. | | | | investor visibility, high standards for corporate |
| Let's start with the question of what a penny share | | | | responsibility and strict reporting requirements. |
| is. Strangely enough, there is no general definition of | | | | * Pink Sheets are good sources for stocks, too, |
| what makes for a penny stock other than it can be | | | | although more caution is required when trading in this |
| defined in three ways depending on who does the | | | | venue. |
| asking and who does the answering. Thus, a penny | | | | You will also be pointed the way toward buying |
| stock can be defined as falling under any of these | | | | straight from the company mainly to avoid the |
| categories: | | | | broker's fees. However, we also caution against this |
| * The price per share at trade value is less than $5 | | | | type of acquiring penny shares as fair market |
| * The stock market where it trades on is not the | | | | valuation may not be as easy as it might appear. |
| mainstream kind like the New York Stock Exchange. | | | | A reliable penny share guide should also point the |
| Instead, special stock markets like the OTC-BB and | | | | way to the methodology, techniques and technology |
| Pink Sheets handle penny stocks. | | | | necessary to pick the best stocks. You can then use |
| * The market capitalization is less than $25 million | | | | such knowledge regardless of the market conditions, |
| although other definitions place it at $50 million | | | | the industry chosen and the value of the stocks. |
| Thus, a reliable penny share guide will consider one | | | | You have many ways to analyze penny shares. We |
| stock as a penny share because it trades at less | | | | can mention technical analysis, fundamental analysis |
| than $5 but it may not be considered as penny stock | | | | and stock screeners, to name a few. |
| because its market capitalization is, say, $51 million. No | | | | Indeed, the right penny stock guide can be your ally |
| matter which definition is taken, similar rules apply as | | | | in building your wealth one stock at a time. |