I am looking to invest in stocks that are currently under {content}.01 per share. Tradeking which is my current online broker states that it does not allow trades for stocks under this price and also adds a {content}.01 fee per share for stocks priced under .00. I would like to know which broker people use to trade sub-penny stocks without outrageous fees. Thanks

Did you know:

Wal-Mart and Microsoft were once Penny Stocks!!!

Yahoo was $2 and America Online was .59 cents.

People who invested in those back then are now multi-millionaires.

LFZA went up 420,000% !!!

RFMD increased 3700% in 8 months.

STST increased 1000% 3 months.

IDPH went from $1.70 to $113. 66,000%!!!

Imagine your investment doubling every week for months.

Investors new to the market, see the extreme low price of Pennystocks very appealing given the potential for exponential growth. It is a lot easier for a .25 cent stock to go to .75 cents than a $25 stock to go to $75. Beware- not all Pennystocks are lottery tickets.

30,000% in one Month

What is a Pennystock?

A Pennystock is a common stock that trades outside of the major exchanges, New York Stock Exchange, NASDAQ, or AMEX. They trade for less than $5 a share and are traded in what is called the over-the-counter market (OTC) market through the quotation service of either the OTC Bulletin Board or the Pink Sheets.

A Pennystock has minimal requirements to be listed on the OTC BB, unlike stocks listed on the major exchanges. Many stocks that are the de-listed from the bigger exchanges resort to listing themselves on the OTC BB or the Pink Sheets. Pink Sheets have almost no listing requirements or regulatory practices compared to the major markets.

Finding that Lottery Ticket

1. Never read Internet message boards, as that is the breeding ground for fraud and manipulation. Many of the so-called unbiased investors there are in fact, insiders of the Company they are pumping and eventually going to dump. They often use multiple aliases to create the appearance of huge interest.

2. Must be a profitable company.

3. Must be in a growing industry.

4. Look for increasingly large volume that is trading in big blocks and best case scenario by company insiders- when company officers and executives buy that is an ideal sign for a penny stock

5. Invest in Pennystocks that have a net asset value per share that is greater than the share price alone.

6. Find out all of the fundamental information available – if it is not available- don’t buy!

7. How much debt do they have?

8. Who is on the management team?

9. Who is their competition ?

Danger Danger Danger

1. Pennystocks are usually “thinly traded”, meaning a very low trading volume, (however Sub-Pennystocks can have an average daily volume in the hundreds of millions).

2. Pennystocks have a lack of transparency regarding Company information.

3. Pennystocks are extremely volatile due to sudden changes in the demand or supply. One of the biggest problems is often the inability to find buyers when you want to sell.

4. Lack of financial reporting.

5. Stock manipulation

PUMP AND DUMP

99% drop in price in one Month

Pump and Dump – the Trader Slayer

Buy the company not the hype. The Pump and Dump is the most prevalent act of manipulation in Pennystocks. A company will unleash a team of people to bombard chat rooms and bulletin boards about how the stock is about to go threw the room and predict insane price targets. They will e-mail or fax newsletters that are supposedly un-biased investors recommending the stock as the greatest stock to buy right now. They even have groups that cold call people’s homes and try to manipulate them into buying the stock.

The manipulators of the stock then sell after it has had a huge run, which is called dumping. Once they pump up the stock and create a frenzy of buying by gullible investors they then dump all their shares. Once they are done selling their shares, the pumping of the stock ceases and the stock price almost always plummets taking with it all the clueless broke investors.

A Business Week article estimated that chop shops or boiler rooms, which are created to manipulate stocks “make up perhaps half the 85 million-share daily volume of the OTC Bulletin Board.”

It is estimated at 15% of all spam relates to Pennystock fraud and manipulation.

The Best Penny Stock Brokers

• Zecco offers trades at $4.50 each and 10 free trades per month on accounts over $2,500. No account minimum, sign up quickly without excessive paperwork and there are no inactivity fees.
• Low Trades is very much a discount broker. They offer the bare bones and low commissions as a result. Commissions are $4.95 per trade. Horrible inactivity fee of $50 But only need to trade twice a year to avoid fees. Real time streaming quotes cost extra for these. No minimum account balance.
• Scottrade charges $7 commission per trade plus on penny stocks they charge an additional 0.5% of the value of stock purchased. Scottrade has a minimum account size of $500, but no inactivity fees.
• Sharebuilder commissions are $9.95 per trade with no account minimums and no inactivity fees.