Where to Trade Penny Stocks

For those who want to know where to trade penny stocks, the answer is literally all around you. Penny stocks are found in three basic locations. These are the various small regional exchanges, the over the counter listings, and the proprietary accumulation of data known as the Pink Sheets.

 Finding Where To Trade Penny Stocks

•             Small regional stock exchanges have lower listing requirements than the larger organizations. As a result, penny stocks can sometimes be found on trading floors such as the Toronto or Chicago Stock Exchanges. While technically penny stocks, many of the companies that gain access to these trading platforms are rising stars in the penny stock world, and they are closer to attaining legitimacy than those who are unable or unwilling to cross the regulatory threshold inherent in gaining access to a regular stock exchange.

•             Most penny stocks are found on the so-called over-the-counter, or OTC, market. These are also known as unlisted stocks due to the fact that they have no home exchange to call their own. OTC stocks are transacted directly from one dealer to another in a process not unlike buying an item on eBay. A stock is listed for sale at a certain price known as the Ask. In turn, someone responds with a Bid price that is usually lower than the Ask. This is known as the Bid-Ask spread. When the two parties can agree on a mutually acceptable price, the sale takes place.

•             The famous Pink Sheets are stocks listed on a proprietary quotation service that assembles the Bid and Ask data in a single collection of data that allows the trader to examine and compare numerous stocks without needing to go to the trouble of hunting out data in multiple locations.

Knowing where to trade penny stocks is important, but so is knowing the risks of a particular stock.