How To Buy Penny Stocks

You need to know how to buy penny stocks. Don’t worry, we’ve all been there. I’m going to assume you know what a penny stock is, but if you don’t, take a quick look at our homepage for a description.

Penny stocks can be traded on various stock exchanges, including the National Association of Securities Dealers (NASDAQ), AMEX (part of NYSE), New York Stock Exchange (NYSE), Over the Counter (OTC) and Pink Sheets. All of these exchanges have different rules for listings. Your better penny stocks will be listed on NASDAQ, AMEX or the NYSE. After that, the OTC BB.

When you get into the Pink Sheets, it’s really the Wild West because “pinks” don’t conform to stricter Securities and Exchange Commission (SEC) rules like other companies listed on other stock exchanges. We recommend you stay away from penny stocks listed on the Pink Sheets. There are plenty of opportunities elsewhere.

How To Buy Penny Stocks

Actually, buying penny stocks is exactly the same as buying any other type of stock. So if you already know how to do that, you know how to buy penny stocks. If not, don’t worry. I’ll proceed with showing you how to buy penny stocks properly.

Here’s the general checklist for buying penny stocks online.

1. Get capital for penny stocks trading and investing. We recommend you have at least $500. Yes, you can start with less, but it’s slow going.

2. Find a good online penny stocks broker. We don’t recommend looking for a full-service brokerage for penny stock trading. You’ll get hammered with fees. You want a discount brokerage. More specifically, you want a good broker for penny stocks. That link has more information about who to look at choosing.

3. Setup an account with your online penny stocks broker. Some penny stock brokers have minimum deposits and some don’t. Capital aside, just choose the best broker for your penny stocks trading plan.

4. Begin researching to find hot penny stock picks. Always do proper penny stocks research before jumping into bed with anything. Don’t just jump into something because you saw someone saying the best penny stocks to buy are X, Y and Z. Investing in penny stocks is highly rewarding, but caution is needed.

5. Execute penny stock trades once you understand how to buy penny stocks.

That’s the general overview. Now let’s look at a few more specifics about how to actually buy penny stocks.

How To Buy Penny Stocks Example

Okay, you’re all set with your online broker and money is in the account. It’s now time to buy a penny stock.

Each stock has its own symbol. For example, the symbol for Google is GOOG. You need this symbol to buy penny stocks. Your broker’s trading interface will make this very easy, so don’t worry if it sounds confusing.

Once you have the company in mind, the next decision is how many shares of the penny stock you want to buy. For our example, I’m buying 100 shares of a fictional company.

Here’s a key penny stocks trading tip for you. Never do a market order. When you buy and sell penny stocks, you want to do what’s called a limit order.

How To Buy Penny Stocks: Orders

Market order: You’re saying I’d like to buy or sell my penny stock and I’ll take whatever price you want to give me.

Limit order: You’re saying I’m buying or selling my penny stock for $X or better, no less.

As you can see, a limit order gives you more predictibility and command over your trades.

You can also select “All or None.” When you choose that option, you’re saying that unless you can buy or sell all of your desired shares, you don’t want to do the transaction.

Next, you can choose the penny stock order’s duration. For example, you could enter the order for just today at market close or just keep it opened until it’s filled.

Penny stocks always have two prices: bid and ask. The bid price is what people are buying the stock at currently. And the ask price is what people are willing to pay currently. The difference between the two is called “the spread.” Stocks with bad spreads can kill a penny stocks trader in a hurry.

Let’s say you see stock for PSCOMP, Inc (fictional company) with a bid price of $1 and an ask price of $1.10. This means that if you buy the stock right now, you’d pay $1.10 per share. And the spread is 10 cents, so if you instantly sold it back, you’d lose 10 cents per share since people are only willing to pay $1 per share. In order for you to break even (not taking broker fees into account), the stock’s bid price must go up 10 cents to $1.10 (so a 10% increase). See why the bid/ask spread is important?

When you’re just starting out with penny stocks investing and trading, start small to get your feet wet. You’ll make mistakes. It’s part of learning how to buy penny stocks. Just keep at it, read and research.

Now you know how to buy penny stocks.

Gold Penny Stocks

When a nation’s currency is in turmoil, people look to invest in gold and gold penny stocks make an interesting choice. If you’ve been even partly alive you’ve seen all the gold news and know the gold price has been on a meteoric rise these past years. But what are the gold penny stocks to buy?

I’ve invested in gold and years ago as part of my gold investment plan I jumped into a gold exchange traded fund that has since exploded. Whether it’s gold stocks, funds or gold coins, you need to be thinking about investing in gold. I expect to see more gold top penny stocks.  Read more

China Penny Stocks

Is it time to invest in China? If you think so, then China penny stocks exist. However, before we all try to jump in on the China stocks bandwagon, let’s look at the country and what we need to be aware of before we start trading these penny stocks. Be sure to read up on making better penny stock picks too.

As part of our ongoing series to bring you the hot penny stocks choices and overview viable trading and investing ideas, we’re beginning to bring you information about China, including china stock picks, good Chinese penny stocks to watch and investing overviews about the Chinese stock market.
Read more

Online Penny Stock Brokers

The financial industry can be tough to navigate and sorting through the waves of online penny stock brokers is just on part of the puzzle. I know one guaranteed way to lose money in the stock market—pick the wrong broker. Flashy ads and steak sizzle aside, they are not even close to being all equal. And when you’re trading penny stocks, your online stock broker selection is all the more critical. Read more

Penny Stocks Research Tips

I’m always amazed at the stories I hear of traders dumping money into a stock without any penny stocks research at all. That’s a quick ticket to the poor house, especially if you’re risking capital you can’t afford to lose (see: Online Penny Stock Trading ).

Funny, these traders will sift through Google.com looking for reviews for a $10 product or for the latest hot penny stocks from some site, but will gladly dump thousands into a stock on a whim. Don’t be that trader. Penny stocks research is vital to your success. Treat your investments like you do your life.

I’m not saying you need to have the home number for the CEO before you make a play, but you do need to be prepared if you want to find the best penny stocks. Start with good sites. Create bookmark folder and fill it up with a handful of sites. I’ve given you some great financial sites, which can be used for more than penny stocks research, in a moment. Read more

Which Penny Stocks to Buy: 4 Winning Indicators

If you’re like many stock investors, deciding which penny stocks to buy consumes a large portion of your time and may even prevent you from investing at all. I think many simply walk away from investing in general because they can’t make a decision.

With this in mind, I want to present you with 4 winning indicators for penny stocks that I look for before doing any penny stock trading. This isn’t some guaranteed winning stock pick checklist by any stretch. Instead, it’s a way of filtering out all the junk and stocks that really aren’t viable options. You’ll still be left with decisions to make, but those investment decisions should be far easier.

Let’s jump right into it. Read more

Where to Buy Penny Stocks Online

So you’re all excited about trading penny stocks and all the profit potential they hold, but there’s one daunting question left to answer. Where to buy penny stocks online?

Buying Penny Stocks Online – The Wrong Way

The absolute worst thing you can do is opening up an account to buy penny stocks with a shady or little-known online stock broker.

If a deal (or fees in this case) seem too good to be true, they probably are. Let’s be realistic here. You can afford to pay the fees from a good, well-known online broker and still make money.

The Internet is littered with online stock brokers that have no history, no reputation and are not stable. This is your money we’re talking about here. Don’t take on more risk than is necessary. Use a good stock broker to buy and sell penny stocks online.

Buying Penny Stocks Online – Deciding on Penny Stock Brokers

If you recall, the focus of Penny Stocks Capitalist is on what the “real” term of penny stocks implies: “penny stocks are low-prices (below $5) speculative securities.” Now, we can continue on and add “of very small companies” to that description, but I tend to look more at stock prices than company size.

There are many reputable penny stock brokers online. I recommend you use one of them that best suits your overall investing needs. Scottrade is an example of on good online stock broker. The fees are decent and their system is solid.

If you want to focus your trades on stocks under $1, Scottrade’s fees are a little more than their advertised $7 a trade fee. Before buying penny stocks, you may want to check out our article on penny stock brokers. Many penny stock traders have the potential to get their capital hammered via add-on fees (common for trades where the stock is under $1 per share).

Basically, when deciding where to buy penny stocks online you want to make sure your trades are executed fast and more importantly that your money is safe.

Online Penny Stock Trading : 7 Simple Rules for Better Results

Online penny stock trading can lead to great rewards, but like any financial investing, it can lead to ruin if you’re not careful. I’ve traded stocks online of all sizes and I’ve been successful at it by following some basic, simple investing rules.

While the penny stock arena has some similar functionality as any typical stock buying and selling, there are some unique characteristics that you should know—especially if this is your first time engaging in online penny stock trading.

Rule One: Penny Stock Fraud – Pump and Dump Awareness

Unlike many stocks in the market, penny stocks are more susceptible to fraud. Typically, you can drastically reduce your chance of buying a bogus stock run by only buying stocks that trade on the major exchanges, such as NYSE and Nasdaq.

The pump and dump scam is easy to explain. First, a stock is talked about in as many channels as possible (penny stock forums, email, etc) to get a buzz going. As people buy the stock, it rises. At some point the originators sell it off and those who bought into the scam are left holding the bag.

Rule Two: Stock Research

This followed up rule one. Learn to do your own research. Even if you’re not a business wiz, just knowing a little bit will help. When someone tells you Company X is going to explode, find out why.

It’s easy enough to find information on a company. And if you can’t find it, move on.

Rule Three: Online Penny Stock Broker

Don’t get suckered by “unknown” brokers offering amazing deals. Find yourself a good, well-known online stock broker and go with them.

Rule Four: Don’t Get Married

Sometimes you’ll invest in a stock that starts moving the wrong way, has had its run or is just plain stagnant. If logic is telling you to get out, sell it. Keep emotional attachments out of transactions.

Rule Five: Penny Stock Software

Whatever interface your online stock broker provides should be more than enough for your trading purposes. Typically, stock software that gives picks doesn’t work too well. If that’s what you want, look for a good newsletter or service.

Rule Six: Google Alerts

Yep, Google can be an awesome everyday tool for investing. By using their “alerts” service, you can be notified whenever Google finds news, blogs, links or Web pages that are about whatever you wish to know about. You can put in a company’s name, domain name or whatever.

Just type in Google Alerts into the search engine to see the link to use if you don’t know already.

Rule Seven: Play with Speculation Money

This rule applies to all investing. Progress always involves risk. As such, you shouldn’t invest with any money you’re not 100% willing to lose. By actually following this rule, you’ll be more likely to keep emotion out of your transactions, which can yield better profits.

Penny Stocks Forum Warning

What could be better than skipping on over to a penny stocks forum to hear about some penny stock that will make you more money than ever—before anyone else knows about it of course. But wait a minute. Are these penny stocks forums really gold mines full of hot penny stock picks or are they capital bear traps?

Over the years I’ve visited many investing message boards from every corner of the Internet. There’s been the traditional Yahoo boards, MSN boards and all the little sites too. Read more

Buy Penny Stocks Online – First 5 Steps to Penny Stocks Trading

Ok, so you know trading penny stocks can be very, very profitable and you want to get in on the action, but you’re not sure of where to start. Here’s a quick 5-step guide to help you buy penny stocks online. It’s a very easy process that anyone can do.

If you already have an account with a penny stocks broker and know the basics, this won’t help you much. This article is about the 5 basic steps to getting setup for online stocks trading.

Buy Penny Stocks

Ok, let’s get started with the 5 quick steps to getting setup for stock trading. By the way, this applies to any online stock activity, not just penny stocks, so if you wanted to trade stocks of bigger companies, such as GE, Microsoft, Google, etc, you’d follow the same process.

Step One: Stock Broker Account Creation

The first thing you need to do is setup an account with a penny stock broker. Find one that meets your needs. If you’re just starting out, I highly recommend you go with a well-known stocker and that you try to trade penny stocks that are in the $1 – $5 range.

Here are related articles to help you further:

Penny Stocks Brokers – How to Choose the Right One

Penny Stock Broker Review – Scottrade

Step Two: Stock Broker Account Funding

Once your account is created via an application, you’ll need to fund it. There are usually various ways to do this. For instance, you could send a check into the main office.

Bank wires are another option. If you’re unsure of the stock broker (features, trade execution, unknown, etc), you should send a small amount. You can always add more later.

Step Three: Penny Stock Selection

Ok, you’ve got the account setup and funded. You’re now technically ready to trade. However, you need to find stocks to trade.

This can be the hardest part for both new investors and those going into a new area. Penny stocks add a little more difficultly, because the companies aren’t usually as known.

I’d pick out an industry or “function” and start looking for penny stocks. An example would be oil penny stocks. Here’s a link to an article on that: Oil Penny Stocks

Additionally, you can monitor stock news, press releases and picks at various penny stocks sites and forums.

The goal at this step isn’t to execute the trade just yet. You just want to familiarize yourself with some stock names for further review.

Step Four: Penny Stock Research

Once you have some penny stocks you like, it’s now time to research potential trades. Usually, your account will have the ability to track stocks. I’d recommend putting the stocks you want to follow in the tracking mechanism.

It makes it easy to spot activity. Researching a penny stock can take more time than researching a “regular” stock, because there’s usually less news, financial data, etc out there.

Step Five: Trading Penny Stocks

Once you have a stock you like, it’s time to execute a trade. You’ll be paying whatever the ASK price is if you put in a market order.

I recommend always using limit orders. Put in the price you want the stock at and let it go. The only way I’d break this rule is if there was a stock taking off and rising by the minute, but that’s a less-likely scenario in the penny stocks arena.

After your trade is executed, you’ll own shares of the stock and it’s now time to monitor the stock often. As a rule of thumb, I like to have an “exit price” in mind before I buy any penny stock. For instance, I might buy a penny stock at $1 per share today with the idea of selling it at $1.50 per share. When it hits that price, it’s an automatic sale.

Any adult can buy penny stocks online with ease. It’s nothing to be scared of. At the very least, get your penny stocks account setup and going.

Penny Stock Picks – 4 Proven Tips for More Successful Trades

I think one of the problems most penny stock traders (and investors) have is they think that penny stocks are somehow different from “normal” stocks (see overview: penny stock trading). Whether you get penny stock picks from a penny stocks newsletter or a crystal ball, it’s the same as getting any stock picks on CNBC. You’ve got to follow some simple steps before putting your hard-earned capital to work. Don’t be foolish with your investments.

Read more

Penny Stocks Brokers – How to Choose the Right One

Finding the right broker is one of the foundation items required for success. Whether you’re looking for penny stocks brokers or a broker for anything, the fundamentals remain the same. Let’s find a good stock broker.

What you want to do is create a list of a few stock brokers to research further. Here are some basic questions to answer before putting any penny stocks brokers on your list.

First, ask the question, “How long have they been in business?”—you need to see some history. Regardless of fees and features, a company that’s brand new has no value. For all you know, they will be gone tomorrow.

Next is reputation. Do they have one? What do you know about them (or think you know about them) without looking up anything?

How about fees? Ask yourself what price range you’ll be trading in. Will you be trading stocks $1 and higher mainly? If not, find out what the broker charges for sub-$1 stocks. For instance, Scottrade offers a flat trade fee of $7 (at the time of this writing). However, they charge differently when trades involve stocks under $1.

Continuing with the example, Scottrade would make my list if I was trading at the $1 level or above. However, if I was going to mainly trade below that level, I’d put them on a secondary list (penny stocks brokers to look at if I didn’t end up with enough to research).

Another information item to find out is whether or not the stock broker has a physical location or not. If they do:

• How many locations do they have?
• Are there any near you?
• Can you just show up there?
• Can you conduct business there (account deposits, etc)?

Once you find an online stock broker that satisfactorily answers these initial questions, put them on your list for further research. In another article on Penny Stocks Capitalist, I’ll go over researching penny stocks brokers in detail.

Related: Penny Stock Broker Review : Scottrade

Oil & Gas Drilling & Exploration Penny Stocks : AMEX

If you’re looking to invest in oil & gas drilling & exploration penny stocks, there’s a handful on the AMEX. Doing a quick AMEX scan revealed 15 penny stocks with prices ranging from $0.34 – $4.49.

These oil and gas penny stocks have market caps from about $23.5 million to $571 million.

Oil & Gas Drilling & Exploration Penny Stocks

Here’s a list of the 15 penny stocks I found that are being traded on AMEX:

• BPI Energy Holdings (AMEX: BPI)
• Dune Energy (AMEX: DNE)
• GeoGlobal Resources (AMEX: GGR)
• Gastar Exploration (AMEX: GST)
• Hyperdynamics Corp. (AMEX: HDY)
• JED Oil (AMEX: JDO)
• Kodiak Oil & Gas (AMEX: KOG)
• Cheniere Energy (AMEX: LNG)
• Petro Resources (AMEX: PRC)
• Storm Cat Energy (AMEX:L SCU)
• Canadian Superior Energy (AMEX: SNG)
• Samson Oil & Gas (AMEX: SSN)
• Teton Energy (AMEX: TEC)
• Tengasco (AMEX: TGC)
• Transmeridian Exploration (AMEX: TMY)

Penny Stock Broker Review: Scottrade

There are many options out there for trading penny stocks, so finding a good penny stock broker can be a difficult thing. Today, I’m going to talk about one of the stock brokers I’ve used personally.

Before selecting any of the penny stock brokers, there’s numerous things to discover. I wrote an article about it here: Penny Stock Brokers – How to Choose the Right One.

Over the years, I’ve used Scottrade very often and have been pleased with them. Their $7 trades allow me to get in and out and not see a big hit to my profits. However, be warned, if you’re going to mainly trade with sub-$1 stocks, their $7 trading fee doesn’t apply.

If that’s you, then there are three options. You could:

1. Open up an account at Scottrade and just deal with it.
2. Open up an account at Scottrade for all your trading involving $1+ stocks and open an account at another penny stock broker for the other trades.
3. Just look elsewhere.

Scottrade offers fast trades and many tools within their trading environment. They are secure and highly visible. Not only have I traded online with them, but I’ve actually walked into on of their offices and performed tasks, such as account creation, depositing, withdrawing, etc.

When I wanted to open an account with thousands of dollars for speculation trading, I wanted to speak to someone face-to-face and I was able to do that with them.

When you’re seeking out a penny stock broker, I’d recommend putting Scottrade on your list of possibilities. There are other links on Penny Stocks Capitalist that will lead you to other stock broker options. Visit some of them and do your research before jumping in with any broker.

NASDAQ Oil & Gas Penny Stocks

We have a few articles online already about some oil and gas penny stocks on the AMEX. In this article, we’ll explore all oil and gas penny stocks being traded on NASDAQ.

Rather than write up separate articles for each industry, we’ve divided up this article by oil and gas industries.

Oil & Gas Drilling & Exploration Penny Stocks

• Glen Rose Petroleum (Nasdaq: GLRP) – $11 million market cap
• Pinnacle Gas Resources (Nasdaq: PINN) – $77 million market cap
• South Texas Oil (Nasdaq: STXX) – $44 million market cap

Oil & Gas Equipment & Services Penny Stocks

• Infinity Energy Resources (Nasdaq: IFNY) – $8.5 million market cap
• Particle Drilling Technologies (Nasdaq: PDRT) – $78.6 million market cap

Oil & Gas Refining & Marketing

• Syntroleum (Nasdaq: SYNM) – $119 million market cap

Oil & Gas Equipment & Services Penny Stocks: AMEX

Once again we turn to AMEX to find oil & gas penny stocks. In the oil & gas equipment & services industry, the field is pretty bare. There are is only one penny stock in this industry on the AMEX.

Since there’s only one penny stock to list, we’ll provide some quick facts about it. If you do your own research, you’ll probably see two listed, but AEN began the AMEX de-listing process in June 2008, so we’re not talking about them here.

You can also find more oil & gas penny stocks listed on AMEX here: “Oil & Gas Drilling Penny Stocks.”

Boots & Coots International Well Control

Boots & Coots (AMEX: WEL) is located in the USA with a market cap of $166 million at the time of this writing, It’s trading around $2.27.

Unlike many stocks, Boots & Coots has seen an uptrend in 2008. Going back to the last quarter in 2007, WEL was being traded between $1.20 – $1.40. However, WEL began to shoot upward in 2008. It closed at $2.27 in mid-July 2008—once again showing the power of penny stocks to deliver solid profits.

Boots & Coots has a market cap of $166 million with $128 million in sales.

Penny Stock Trading – Fastest Way to Millions in the Stock Market?

There’s a lot of debate as to what is the fastest path to making millions in the stock market. If you’re starting with just a little capital, penny stock trading can certain pay huge rewards.

Penny Stock Trading

What exactly is penny stock trading though? Actually, if you buy a stock with the intent to sell it in a short period of time (minutes, day, weeks, couple months, etc), you’re basically a penny stocks trader. Conversely, a penny stock investor is typically someone who will buy stocks in a company and let them sit there for a longer period of time—usually many months, sometimes years. Investing has its merits, but I still believe penny stock trading reigns supreme because you can greatly limit your capital risk by having limited exposure and you can grow your capital by taking advantage of stock volatility.

I’ve made big returns on trading penny stocks quickly and I’ve had others that were simmering for months before they bubbled up. In reality, your best chance for success is to be flexible. What’s great is you can sit back and buy penny stocks online all trading day long.

Penny Stock Trading Success

Perhaps a better question is simply about the profitability of penny stock trading in general. After all, the real goal to wealth building is to find a vehicle that makes a profit and then improve or replicate that vehicle. While grand slams are great, most wealth is built through a constant barrage of profitable singles (if I can steal some baseball terminology).

I think researching penny stocks is more vital than anything else. Many stock traders just look for charts and technical items, but if you look at penny stocks that experience 100%, 500%, 1,000% and more growth, it was because of the company and not because the stock hit some technical indicator.

In other articles, we’ll talk more about penny stock trading and about things to look for. One idea is to look at the big companies and see who they are dealing with and what they are dealing in. That’s how I identified one penny stock that yielded me 1,000% profit when I dumped it. Penny stock trading works.

Movie Production Penny Stocks

The big screen isn’t reserved for just high-priced stocks. While there isn’t an avalanche of movie production penny stocks, there are a few on the market. If you’re a movie person and a someone who likes investing in what you know, perhaps one of these four penny stocks will be for you.

Movie Production / Theaters Penny Stocks

National Lampoon

National Lampoon (AMEX: NLN) is based in the US. It’s a smaller company with a market cap of almost $13 million.

According to sources, they have 26 employees and sales of $4 million annually. Looking over the one-year chart, we found decent volatility (if you like day trading penny stocks).

Image Entertainment

Image Entertainment (Nasdaq: DISK) is also based in the US. They have 138 employees and about $95 million in sales—market cap is $25 million.

In February 2008, the stock took a major hit—dropping from $3.50 to about $1. Over the next few months it had some wild swings before settling down.

New Frontier Media

New Frontier Media (Nasdaq: NOOF) has 170 employees and $56 million in sales. NOOF has a market cap of $78 million.

This stock wasn’t a penny stock until the end of last year when it started dipping below the $5 mark. It took a big hit in June 2008 and is currently playing in the $3 arena. Many expect it to rebound.

Peace Arch Entertainment Group

If you look at Peace Arch Entertainment Group’s (AMEX: PAE) distribution list, you’re unlikely to see huge Hollywood blockbusters. What you’ll fine are creative and “disturbingly distinctive” feature films—like The Tudors.

Peace Arch has 90 employees and a market cap of $20 million. Since November 2008, the stock has been on a downward turn. It’s fallen low enough that some value investors are beginning to see it as a bargain.

Penny Stocks 101 – Buying & Selling

Just what is a penny stock? Some people believe penny stocks are for companies with no assets and that penny stocks are always pennies per share. But, this just isn’t true.

Others believe that penny stocks are only traded in back alleys somewhere.

Did you know that stock for big companies, such as Microsoft and Wal-Mart, were penny stocks at one point in time? For many, penny stocks represent a real goldmine.

I hope this article will help shed some light on penny stocks for you. Be sure to explore Penny Stocks Capitalist for more great information and stock tips.

Penny Stocks Defined

Penny stocks are stocks that are being traded at $5 or less per share. Usually, these companies are smaller. Their classification as a penny stock is solely about the price the stock is being traded at and has nothing to do with the company’s market capitalization—some people confuse penny stocks with microcap stocks.

From the U.S. Securities and Exchange Commision’s Web site: “The term “penny stock” generally refers to low-priced (below $5), speculative securities of very small companies.”

While many penny stock Web sites tend to focus on companies that offer “sub-penny” shares, any stock up to $5 is a penny stock.

Penny Stocks Trading

Penny stocks are traded in various places. For instance, you can find penny stocks being traded over the counter (OTC Bulletin Board and Pink Sheets) and on securities exchanges, such as Nasdaq, AMEX and the NYSE.

Many stock investors believe that penny stocks are only traded “outside of the normal market.”

Here’s a quick list of some random penny stocks being traded on the Nasdaq, AMEX and NYSE (at the time of this writing):

3COM CP (NasdaqGS: COMS)

Actuate Corp (NasdaqGD: ACTU)

Salary.com (NasdaqGM: SLRY)

Cycle Country Accessories (AMEX: ATC)

BlueLinx Holdings (NYSE: BXC)

Huttig Building Products (NYSE: HBP)

Penny Stocks Research

Researching penny stocks is a little more difficult than researching a large-cap stock. There isn’t as much information available.

You should always research a penny stock before taking the plunge. In our next section, we’ll talk about penny stock fraud. Make sure the company you invest in is a real company with real operations and not a shell corporation—do this regardless of the price of the stock.

You can start your research in many places—your online trading broker is a good start. Yahoo! Finance (finance.yahoo.com) is another great starting point.

Penny Stocks Fraud

You should always be cautious when investing in the stock market. Always do your own research.

One way to avoid being the victim of stock fraud is to research the company via well-known financial portals, such as Yahoo! Finance and your online stockbroker. Check to see what exactly the company is doing. Look into their operations. Look for news. And make sure it’s a real company.

Online stock forums, especially penny stock forums, are key targets for “pump and dump” con artists. Here’s how it works:

1. The person/company purchases stock in a company.

2. They then pump the stock everywhere (forums, email blasts, etc).

3. The stock goes up and they sell their large holding.

4. The stock falls and you lose money.

This happens all day long and with all types of stocks (not just penny stocks). Many pump and dump campaigns involve Pink Sheet and OTC Bulletin Board stocks. Additionally, the stocks are usually very cheap (sub-penny).

While forums might be fun to participate in, always do your own research.

One more way to protect yourself is to only trade with a highly-recognized broker. Fly-by-night brokers can charge you more than a penny stock is worth (another form of penny stock fraud).