Posted on 25 October 2011.
The penny stocks stock market is made up of a diverse assortment of penny stock
companies in a variety of different types of businesses and a number of shell penny stocks that do not represent operating businesses, but still have intrinsic value as a shell. Many market forces affect the price of penny stocks that trade on the penny stocks stock market; however, news and momentum are the primary forces that drive penny stocks.
The penny stocks stock market is actually made up of two stock quotation services: the Over The Counter Bulletin Board (OTC BB) and otcmarkets.com (Pink Sheets). Both
are Internet based platforms on which penny stock shares trade. Besides facilitating trading in penny stocks, these websites also provide a great deal of information about penny stock companies. This information includes company contact information, company news releases, share structure information, insider sales information, filing status, and if the company is a Security and Exchange Commission (SEC) reporting company they provide company SEC filings. It is important to read this information to develop an understanding a penny stock company prior to investing, and to call the company if you have further questions.
What distinguishes Over The Counter Bulletin Board penny stocks from penny stocks
that trade on the Pink Sheets, is that Over The Counter Bulletin Board Stocks must be fully Securities and Exchange Commission (SEC) compliant with their SEC required filings. Companies that are not fully SEC compliant are banned from the Over The Counter Bulletin Board and usually wind up trading on the Pink Sheets, since Pink Sheets has no SEC compliance requirement to be quoted by their quotation system.
Most United States based brokers that facilitate trading in the penny stocks stock market do not allow margin buying or shorting of penny stocks. Margin buying or short selling of penny stocks is almost exclusively done via trading accounts set up with brokers outside of the United States, where different margin and short selling rules apply. For more information about trading penny stocks, see: Where
to Invest In Penny Stocks.
Shell penny stock companies that trade on the penny stocks stock market are companies that have no real business operations, but are kept SEC compliant by their owners to attract private companies for reverse mergers. Shell penny stock companies may lay dormant with little trading or movement for years, and then suddenly surge higher as their intrinsic value is realized when a private company offers to take a shell penny stock company over to use them as a vehicle to go public in a reverse merger. For more information about shell penny stock companies and reverse mergers, see:
Reverse Merger Stock Plays.
The most valuable commodity in the penny stocks stock market is information, since it is important to know about the penny stock companies that penny stocks represent, their current news, pending events, and prospects for future growth. It is important to read a penny stock company’s press releases and SEC filings carefully to obtain information about the company. Many penny stock companies that trade in the penny stocks stock market also have an Investor Relations (IR) person at a listed phone number and e-mail address who can be contacted for additional details about a particular penny stock company and plans are for the future.
While there are many places that an investor can find penny stock investing information, two websites are particularly useful since they host active penny stock investing boards that provide useful penny stock investing tips and information, and also allow penny stock traders to find the currently hot penny stocks. These two websites are: http://investorshub.advfn.com/ and http://siliconinvestor.advfn.com/. Investors Hub has many company specific investing boards that contain information, discussions, and updates regarding specific penny stock companies. Penny stocks stock market investing tips and information can also be obtained from penny stock tips and information websites that offer email alerts and plentiful penny stock information, such as http://www.stockrockandroll.com/.
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