Investing Terms
   401k Plan
   403 Plan
   529 Plan
   12b 1
   Agency Bonds
   Asset Management
   Bear Spread
   Bond Yield
   Bull Spread
   Call Option
   Closed End Fund
   Commodities Broker
   Convertible Bonds
   Covered Call Option
   Current Yield
   Custodial Account
   Debit Spread
   Defined Benefit Plan
   Defined Contribution Plan
   Diagonal Spread
   Fixed Annuity
   Foreign Currency Option
   General Obligation Bond
   Growth Fund
   Hedge Fund
   Horizontal Spread
   Income Fund
   Independent Broker
   Index Fund
   Index Option
   Interest Rate Option
   Life Annuity
   Limited Partnership
   Margin Account
   Married Put
   Money Market Fund
   Mortgage REIT
   Municipal Bond Investing
   Mutual Fund Investment
   No Load Fund
   Nominal Yield
   Online Stockbroker
   Online Commodity Broker
   Online Real Estate Broker
   Option Spread
   Option Straddle
   P E Ratio
   Penny Stock Investing
   Portfolio Management
   Preferred Stock Investing
   Private Placement
   Put Option
   Put Bonds
   REIT Investment
   Revenue Bond
   Secured Bond
   Short Sell
   Stock Option
   Stock Warrant
   Subordinated Debenture
   Tax Deferred Annuity
   Treasury Bill
   Treasury Note
   Treasury Bond
   Treasury STRIP
   Trust Account
   UGMA Account
   Unit Investment Trust
   Variable Annuity
   Yield To Maturity
   Yield To Call
   Zero Coupon Bond

   Insurance CE
   Marketing Training
   Contact Us

Trading and Buying Penny Stocks

Stocks that do not trade on an exchange and are priced at $5 or less are known as penny stocks. Buying or investing in these stocks carries more risk than other securities, as they are normally new or emerging companies and the trading ability of them is usually limited to a fewer number of brokers who can fill penny stock trades.

These investments do not trade on the NYSE, AMEX or any other actual stock exchange. They also do not trade on NASDAQ. The trading, buying and investing of these shares is done through an Over The Counter market of firms acting as market makers. These market makers are brokerage firms that own or can readily provide the shares to investors and broker dealers.

Professional System Course

Penny Stock Profit System - SEE $1000 turn into $240,000! - view real statements and enroll in the course.


Penny stocks are listed in the pink sheets. This is a daily inventory and price list of the available stocks and the brokerage firms that are showing them. If a person want to begin investing in these stocks, their broker would call the market maker and buy the shares for the investor. The firm would charge a mark up, and the customer would pay that increased price.

A customer who wants to know how to invest in penny stocks should ask their broker. Firms are required to send out a risk disclosure to the customer beforehand.


Since the market is normally limited to the amount of stock firms owning these stocks, investors must be aware that their ability in trading these shares is limited to the secondary market reliablity and the amount of market makers able to sell the penny stock out for them. Since this is usually the case, the bid and ask (buy and sell) spreads can be wide.


Investors who want to use penny stocks within their portfolio should diversify the industries as much as possible. There are winners and losers across the market when investing in these smaller companies. If one industry is down, a penny stock can still bring high returns in another industry.

Most brokerage firms do not allow these shares to be bought on Margin because of the higher risk and less predictable market price that many Penny Stocks are. If a firm does allows margin trading for investing in these stocks, the requirement is normally pretty high - with some trading firms requiring up to 100% of the first trade paid in full.

A risk disclosure document is normally required to be sent before investing in these companies.

Professional System Course

Penny Stock Profit System Penny Stock Course - A great learning tool. $$$

Professional Trading Systems

How A Broke MIT Student Discovered a Secret Strategy That Turned $1,000 into $1.4 MILLION in Just 13 Months…

  Intrinsic Value
  Futures Trading Course
  Forex Training

Copyright American Investment Training, Inc.