Penny stocks are common shares of small public companies that trade at less than $1.00. In some countries, similar shares of stock are known as cent stocks. Penny stocks usually do not trade on the major stock exchanges such as the NASDAQ and the New York Stock Exchange (NYSE) because they typically can not qualify for the strict listing requirements. The listing requirements for stocks that trade on the major stock exchanges need to have a certain amount of shareholders, a certain amount of assets and have to regularly file financial reports on a timely basis. They’re also being supervised plus regulated from the Securities and Exchange Commission (SEC).
Most penny stocks are usually exchanged at the Over the Counter Bulletin Board (OTCBB). It’s an electric quote system meant for the over the counter securities that aren’t listed with one of the main stock markets. Organizations are just required to file finance reports for the Securities and exchange commission’s. When they do not, this company will be delisted from the OTCBB listing and also the share is only able to be exchanged over the Pink Sheets. For those who are considering joining the penny stock market, here are some Stock Tips that will surely help in new venture. In this kind of business, we can look forward to gaining a lot of profits, if you know how to manage your shares.
The disadvantages with penny stocks are their low liquidity. A listed stock can’t very easily change hundreds of percent within just a couple of days, a penny stock is able to do that very easily. The lower stock price can help you obtain large amount of shares with a small sum of money. Little price increases or decreases might have major impact on the performance of the stock.
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