Tips Guides

You,ve probably heard of the term OTC stock or penny stock from a water cooler discussion. OTC stocks were called as such because decades ago, that was how US investors actually bought and sold stocks over the counter at their local broker’s office. To fully understand OTC stocks, let’s look at how they fare side by side with regular stocks.

Where the money rolls
An over-the-counter (OTC) stock is also known as unlisted stock meaning it is not listed in traditional stock exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq. OTC stocks are traded by broker-dealers who [ Read more ... ]

Penny stocks trading functions on a very simple principle. You buy shares from a small cap company; you stock it and wait for its prices to go up. When the price goes up, you cash out your profit.

It may appear simple, but once you’re in actual trading, everything becomes a little more taxing. Important decisions will have to be made within minutes. Money that has been invested must be properly supervised. A mistake will automatically mean losing funds.

Everything begins to be more complicated with the fact that top penny stocks are not sold to you [ Read more ... ]

A Pump and Dump scheme is a form of fraud that artificially increases the price of a stock by means of false and deceptive positive statements (pump), in order to sell the cheaply purchased stock at a higher price than its original value (dump).

Penny stocks are often used by fraudsters in scam operations. This is because the shares are not traded in the major stock markets, and can be acquired inexpensively at pre-pump prices and eventually sold over the counter.

Since these stocks are usually quoted in the Pink Sheets (which has zero disclosure requirements to be listed), and Over the [ Read more ... ]

A person who would like to purchase, or sell, or otherwise trade in securities known as over the counter (OTC) Stocks could look for such stocks at the Over the Counter Bulletin Board, also known as the OTCBB.

The OTCBB is a regulated electronic quotation service that displays quotes, sale prices, and volume of sale information of OTC Stocks. The OTC Stocks include warrants, US-company issued stocks, and shares of foreign company stocks.

The OTCBB has over 5,000 companies that have OTC stocks quoted in its electronic quotation service. These different OTC stocks are dealt with by the Market Makers. There [ Read more ... ]

Most of the major companies’ stocks are traded on formal stock exchanges like NASDAQ, AMEX and others. These trading facilities are corporate owned and regulated by rules and regulations laid down by the Securities and Exchange Commission (SEC).

In contrast, some financial instruments such as bonds, stocks, commodities or derivatives are traded directly between two parties, the buyer and the seller. These transactions may happen over the phone or through the Internet. There is no formal facility required for these transactions. Such transactions are called Over The Counter Transactions or Trading.

In the US, over the counter trading happens through electronic quotation [ Read more ... ]

Stocks or shares of a company are of many kinds. Two broad kinds of shares are equity shares and preference shares. The primary difference is that preference shareholders have a preferential right when it comes to dividend and liquidation. In fact, some of them may even get a fixed dividend depending on the company’s policy.

Equity shares are bought and sold in trading facilities that are called stock exchanges. Also, the value of these shares may differ depending on the company’s equity capital outlay, number of issued shares and demand and supply conditions of the shares at any given point [ Read more ... ]

Once you start on penny stocks trading, it is important to decide how much you are willing to invest. Always keep in mind that penny stock trading is risky and may cause you to lose all of your money, so be sure to invest an amount that you can afford to lose.

After you have decided on the amount that you are willing to invest, regardless of whether it is $1,000 or $10,000, always avoid the temptation to invest all of it on one or two stocks. Why? In the first place, the whole purpose of putting your money in [ Read more ... ]

It is known that investing in the penny stocks of a micro cap company can be very risky. This is why acquiring information about the company and its financial standing is imperative. Buying penny stocks without performing a scrupulous investigation on its background can be very costly.

Micro cap companies with questionable factors are becoming abundant. Before investing on their stocks, it is very important to probe their dubious issues.
Here are some questionable factors that you should pay attention to when investigating a micro cap company and its stocks.

The Company

Questionable suspensions. Check if the company has any suspensions [ Read more ... ]