Make sure you have an online trading account with a broker that allows you to trade penny stocks. TD Ameritrade account holders have had issues in recent months gaining access to trade certain penny stocks. eTrade and some of the other discount brokers who specialize in penny stocks will gain you access to one of the most lucrative markets in the world.
OTC Market Facts:
- Over 10,000 companies trade on the penny stock markets
- In April, the OTC market traded over 2 Billion US Dollars of Volume
- Nearly 900 Million shares traded daily in April, 2012
- The OTC market has grown to over $600 Trillion in the last 2 decades
- Major internationally active financial institutions have significantly increased the share of their earnings
- All OTCBB companies must file updated financial reports with the SEC
Have you ever wondered what makes the “penny stock” market tick?
Why OTC stocks can make incredible percentage gains for no reason?
Why OTC stocks seem to go up for a while but then come down even faster?
Can I make money in “penny stocks” and not lose my money?
Investors and Traders have so many tools out there that will educate and assist you, allowing you to be knowledgeable about your investments – when to buy and when to sell. Everyone investing in this market, or any market, needs to know the answers to these questions before they will have any success with penny stocks. Once you understand the OTC market, half the battle is over and you will make smarter, more profitable, trading decisions.
Make sure that you focus on the right number – the percentage change, not the actual amount per share. OTC Traders and Investors focus on it all the time and often see themselves in the midst of a wealth building scenario. Just like any other financial product, penny stock investments that you make need to be businesses that you know and trust. The only difference being that these stocks just aren’t worth as much as bigger companies who trade at higher levels. If you are a novice trader, just beginning at investing or don’t have the money to put in big investments, this is a great way for you to invest.
The price of a penny stock mirrors the same attitude of the market most times. If investors are excited, they sprint up; if they are irritated or worried, the market will swing in the other direction just as fast. There are no specialists in penny stocks like there is on NYSE, NASDAQ, FTSE, DAX, etc. These markets have specialists whose job is to keep prices stable. The specialists who stabilize these prices are required to step in whenever there is an imbalance and buy or sell stock out of their own account to balance the order flow which slows down price swings.
Hence, since OTC stocks do not have specialists, the market price reflects exactly what buy and sell orders are out there at any given moment. Due to this, a large number of investors buying causes the stock to move up quickly and vice-versa if there is a large number of them selling. Short selling penny stocks is rarely ever a market mover.
Now, it’s all about knowing what types of trades to place once you have found a stock of your liking and developing a trading strategy.
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