Where to find Penny Stocks
Penny stocks are known for being high risk investments but with sizable percentage returns. Penny stocks are companies that trade with a share price that is below $5; although, many can often be less than $1.
Where to buy Penny Stocks
Some penny stocks are traded on regular exchanges such as Nasdaq and NYSE. However, these major stock exchanges often have strict listing requirements. Penny Stocks, are commonly found on trade listing services like Pink Sheets and OTCBB. The main difference between the two listing sites is that Over-the-Counter Bulletin Board (OCTBB), is a quotation. OCTBB manages their listing requirements and is registered with theSecurities and Exchange Commission. While Pink Sheets on the other hand only provides those who are investing with quotation information on the penny stocks that are included in their market and is not registered with the SEC, or enforce any listing requirements.
Similar to other stocks, you can invest in penny stocks through your normal stockbroker. When searching for a penny stock broker it is important to look for a broker who charges a relatively low flat rate per trade that is not dependent on how many shares are traded. When the flat rate is minimum, the smaller the impact that fees and commissions will have on the final outcome.
These are a few of the U.S.-regulated penny stock brokerages:
- Scottrade: Scottrade provides critical information and research tools in order to aid investors when making trade decision. This brokerage also offers a flat training base of 7 per trade, and .05% of the trade principal.
- Charles Schwab Corp: Charles Schwab Corp charges $8.95 per trade. They offer penny stock trading through Over the Counter Bulletin Board (OTCBB) and Pink Sheet markets.
- ChoiceTrade: Choice Trade charges a flat fee of $7 per trade for trades including up to 500,00 shares. If the trades are over 500,00 shares, ChoiceTrade charges a base commission fee of $7 per trade, and an additional 1% of the total dollar value of the trade order. ChoiceTrade offers investors penny stocks through OTCBB as well as Pink sheets and is a member of the NYSE Arca and importantly register with the Securities and Exchange Commission (SEC).