Where To Find Penny Stocks

Penny stocks, like any other equities, trade in a stock market. It looks elementary, if you wonder where to buy penny stocks.

On the other hand, not all the stock markets trade $5 or less stock. However, it would still be great to know the best and safest place to look at penny stocks so you can make sound investments of your money.

NASDAQ Small Cap Market

The companies listed on the NASDAQ Small Cap market are required to file financial reports for their company, regardless of how small its market value. It gives a chance for investors to study the company's audited sales and financial reports.

Stock shares listed here are usually above $1. When the shares go below a dollar, NASDAQ Small Cap knocks them off the board. The information and financial news coverage here is good which gives higher visibility for brokers so they can get a better look at small companies' reports.

Stock brokers find trading at the NASDAQ much easier because of its exceptional investor participation and trading volume. They have cited corporate responsibility and strict reporting as the reason they traded at this small cap market. Add to this the relatively easier way to buy and sell stocks.

American Stock Exchange (AMEX)

Brokers have also found the AMEX or the American Stock Exchange as an invaluable market to trade penny stocks. Though the trading in AMEX has lesser volume than the NASDAQ small cap, investors still enjoy the same visibility from NASDAQ, for small companies are required to file financial reports. In addition, quotes and financial news services still do follow companies in American Stock Exchange to provide comprehensive coverage. If you're unsure on where to buy penny stocks, AMEX is a good place to look at.

Over-The-Counter Bulletin Board (OTC- BB)

Over the counter Bulletin Board accounts as a "home shelter" for stocks not listed in NASDAQ and AMEX. They do create regulated quotation, show real time service quotes, volume information, and last sale prices in the over the counter equities.

The OTC-BB lists more than 300 Market Makers, displaying interest indications and prior day activity in trading. Access to more than 3,600 securities is available in OTC-BB.

The Pink Sheets

Stock trading in Pink Sheets doesn't require regulation or financial reporting. It has no responsibility to the investor at all. Brokers have found it very hard to trade here because of its sporadic and low volume. Pink Sheets originally started with the Yellow Sheets as a resource of information in OTC bonds and stocks in 1904. That was a time when the National Quotation Bureau, which started out as a paper based quotation service to link dealers in market makers of Over the Counter securities in America.

Financial experts have so far warned to stay away from Pink Sheets. They have no rules, nor do they have requirements for listings. There’s not much information or financial data from companies either. In other words, it's one place where you don't want to buy penny stocks.

Direct from Companies

Though it is possible to buy shares straight from the companies, there is no assurance of getting a fair valuation of market prices. Most of the time, the amount quoted would be higher. There's no system to match up the buy and sell orders. Even if it looks good that you don't have to pay for brokerage commissions, most advise not buying directly.

There is no given rule on the perfect place where to buy penny stocks. Just keep in mind to choose wisely the places where you are going to buy your shares. Make sure you have all the financial information and reports that you need at your disposal.