Good pennystocks are sometimes listed on the Over the Counter Bulletin Board or the OTCBB. The OTCBB displays real time quotes, volume information and last-sale prices on securities that are not listed on NASDAQ or another national securities exchange.

OTC is a term that refers to transactions between individuals, without the involvement of the Securities Exchange Commission.

Since the SEC is not involved, the investments are riskier. There is more chance that fraud can occur.

That doesn’t mean they are not worthwhile investments. It simply means that you need to do your own research. The SEC is not doing it for you.

Many famous companies were at one time traded as penny stocks. Sun Microsystems is just one example. Shares in the company originally sold for less than $5 each. It was a company to watch and serves as an example of what can happen to companies in the future.

Sun experienced dramatic growth prior to the burst of the dot-com bubble in 2001. Anyone that was day trading prior to that time might have made a lot of money if they sold their shares before the burst of the bubble.

That’s one of the tricky things about daytrading. You have to decide when you will sell. You can watch the value of a stock climb and keep waiting. Once the value starts to drop, you have to sell quickly.

If you are one of the smartest investors, you sell when the value reaches its peak. But, only people with crystal balls know when the peak will come.

You see people chatting on internet forums about good pennystocks and other OTC investments. If you have a suspicious mind, you have to wonder why people offer tips for free.

It could be to drive the price per share up so that they can sell off their shares. There’s nothing illegal about that. Whether or not it’s ethical is another question.

If you take a look at the PINK list, you will find quotes from many broker-dealers on over the counter stocks. Often referred to as the Pink Sheets, the companies on these lists may be inactively traded.

They may be penny stocks or they may be securities that are only appealing to specific investors. Sometimes the appeal is to investors that have a specific geographical interest. They might want to invest in their home town for example.

The amount of promotion given to these smaller markets varies among brokers. If you are interested in investing in penny stocks or other OTC securities, talk to your broker. It could be a profitable discussion.

Penny stock is stock that is traded for less than one dollar per share. It is also a term used for stocks traded at less than five dollars per share, in some cases. Penny stocks are mostly stocks of small cap companies, though this does not mean that all small cap companies only deal in penny stock. They are worth a few million dollars in net tangible assets.

Please do your due diligence research before you buy into pennystocks.

Author Bio: Ingvar is the author of finance articles and operates several finance and investing websites. For more information see: http://www.buypennystocks.ca