Penny stocks are sold in several different markets. Some Markets are more regulated than others, which gives us some balancing options when buying penny stocks. Though they are all risky and prone to manipulations, there is a level of risk that can be associated with each penny stock depends on the trading market.
NASDAQ SmallCap Market
The stocks in this category are considered to be the safest to invest your money into. The companies are required to report their activities to the market. In order to maintain their listing in the NASDAQ they have to conform to all requirements. As a result, traders like you and I have the possibility of find their data online when doing our research prior to invest.
All their financial results and reports are made available for anyone who wishes to look for them. That’s the reason they are very favorable over the other penny stocks.
Another difference with those stocks in this market is that their price usually starts from $1.00 and more. NASDAQ SmallCap Market does not accept stocks selling for less than $1.00 to be listed with them. In the case where some stocks that were already listed with NASDAQ SmallCap happen to drop below a dollar per share, they will be forced to move out. OTC-BB, which stands for Over-The-Counter Bulletin Board would be their new home.
Over-The-Counter Bulletin Board
The OTC-BB is also owned and operated by NASDAQ making it a good market to do your investment. It provides information on these stocks, such as quotes, prices, and volumes. There’s an approximation of 3,600 stocks in this market. You can find information on each one of them through this system. Like I said before, they cost less than a dollar per share.
Pink Sheet Penny Stocks Market
This is the category of penny stocks I assume to be the most traded ones due to their very low price. Beginners usually start trading with them because they want to buy lots of shares with minimum amount of money, thus high possibility to make high profits. But in reality, they are the most dangerous stocks to own due to their high rate of frauds association, such as Pump & Dump scheme.
This is where the stocks many people are running away from reside. These stocks are the “real penny stocks” because they will usually be in the penny range. Many people do not trust them due to the fact that they are not regulated. They are the primary target for manipulators.
On the other hand, you would find many traders who do not want to trade any other stocks besides those in this category. Since they are so cheap there is a high chance to make a killing from them if things go your way.
The most feared factor of those stocks is the manipulations, although they can be found in any penny stocks’ market, traders believe that those scams occurred the most in this category.
To help you spot them and prevent you from some potential losses, we come with this idea which provides you a list of the PUMPS & DUMPS stocks every morning. You should take advantage of this feature because it has been very helpful for several traders like you thus far.
The American Stock Exchange (AMEX)
AMEX is somewhat similar to the NASDAQ SmallCap, in that they are required to report their activities on a timely manner. They have a difference which is their volume. You may find those stocks to have a lower volume than the others.
They are safe to buy; buying and selling do not take time with them. Their information accessibility is very good. I would not have any concern trading those stocks.