Penny Stock Picks and Trading Tips

Penny stocks, Microcap stocks or nano stocks are interchangeable terms and refer to stocks that trade for less than five dollars. One can calculate a market capitalization of the company by multiplying the number of shares outstanding with the company's stock price to obtain the total dollar value of all current shares of the company. Penny stocks are dealt in the counter or OTC market. Majority stock trading is done through brokers who take a commission for trading… (more)

Penny stocks, Microcap stocks or nano stocks are interchangeable terms and refer to stocks that trade for less than five dollars. One can calculate a market capitalization of the company by multiplying the number of shares outstanding with the company's stock price to obtain the total dollar value of all current shares of the company. Penny stocks are dealt in the counter or OTC market. Majority stock trading is done through brokers who take a commission for trading transaction between the third party and the investor. Sometimes Penny stocks are traded by brokers who make their money through spreads which means buying and selling large number of penny stocks at appropriate times. Spread is the difference between bids and asks prices which ranges from 25 to 33% or may increase to 50 to 100%. In this type of trading penny stocks are subject to price changes, so the broker holds the penny stock and sells at the time which is advantageous to him.