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Buy Penny Stocks on the OTC Market

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Buy Penny Stocks

Why Buy Penny Stocks?

It may seem counter-intuitive to buy penny stocks. Some investors are intimidated by stocks and other assets that have such alarmingly low price tags. They are naturally attracted to big ticket stocks with values over $100 per share.

However, there are actually many more opportunities with low-priced stocks. These assets have much more upside to them. This means that they can gain proportional values and make larger returns. For instance, a 10-cent stock that advances 10 more cents doubles the size of your stake. Such a 10-cent advance with a $100 stock, though, would be meaningless.

How to Buy Penny Stocks

If you decide to buy penny stocks, you will probably not be able to find them on the major stock exchanges. Typically, the companies that issue penny stocks have not filed with the SEC. Therefore, they have not acquired listings on the NYSE or any other large exchange.

You have to buy penny stocks in the over-the-counter (OTC) market. This means that you lose some of the advantages of trading on a major exchange. For instance, you lose the oversight and fraud protection that the SEC can provide. You make purchases directly with the sellers many times. In addition, stocks are not always as liquid on the OTC market.

However, there are many advantages when you buy penny stocks on this market as well. You gain access to stocks that can outperform those found on the NYSE. You can also make a living from making frequent sales and garnering incremental profits on each.

Many people who buy penny stocks are day traders. You have to stay alert and react quickly to make money when you buy penny stocks on the OTC market.

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